Question

1. Suppose that there is an increase in the costs of production that shifts the short-run aggregate supply curve left. If there is no policy response, then eventually

	a.	because unemployment is high, wages will be bid up and short-run aggregate supply will shift right.
	b.	because unemployment is low, wages will be bid up and short-run aggregate supply will shift right.
	c.	because unemployment is high, wages will be bid down and short-run aggregate supply will shift right.
	d.	because unemployment is low, wages will be bid down and short-run aggregate supply will shift right.

2. A decrease in the expected price level shifts

	a.	only the long-run aggregate supply curve right.
	b.	only the short-run aggregate supply curve right.
	c.	both the short-run and the long-run aggregate supply curve right.
	d.	Neither the short-run nor the long-run aggregate supply curve right.

3. Aggregate demand shifts right if at a given price level

	a.	taxes fall and shifts right if the money supply increases.
	b.	taxes rise and shifts right if the money supply increases.
	c.	taxes rise and shifts left if the money supply increases.
	d.	taxes fall and shifts left if the money supply increases.

Answer 1

1.If there is an increase in the costs of production that shifts the short run aggregate supply curve left.if there is no policy response,then eventually

c.Because Unemployment is high, wages will be bid down and short-run aggregate supply will shift right.

2. A decrease in the expected price level shifts.

b. Only the short--run aggregate supply curve right.

3. Aggregate demand shifts right if at a given price level,

b.taxes rise and shifts right if the money supply increases.