Workers and firms both expect that prices will be 3% higher next year than they are this year. As...
Question:
Workers and firms both expect that prices will be 3% higher next year than they are this year. As a result, _____.
a. workers will be willing to take lower wages next year
b. the short-run aggregate supply curve will shift to the left as wages increase
c. the purchasing power of wages will rise if wages increase by 3%
d. aggregate demand will increase by 3%
Short-run Aggregate Supply
The short-run aggregate supply is graphically represented by the upward sloping curve. In the short-run, as price rises, the aggregate supply also rises in the economy. It is because of the positive relation between price and output in the short-run period.
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Aggregate Supply in the Short Run
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Chapter 7 / Lesson 8
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Learn about the short-run aggregate supply curve in running businesses. Understand the supply curve for short-run aggregate supply in concept and through examples.
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