Question 1

The economy's aggregate supply (AS)curve is assumed to slope upward because

Accepted Answer

A) inputs become more expensive at higher levels of output. 
B) inputs become less expensive at higher levels of output. 
C) firms' unit costs rise as output increases. 
D) firms' unit costs fall as output increases. 
E) aggregate demand increases at higher levels of national income.

Question 2

FIGURE 23-4
-Refer to Figure 23-4.Suppose the Canadian economy is initially in equilibrium at point A.An unexpected shock then shifts both the AD and the AS curves as shown and results in a new equilibrium represented by point B.Which of the following events could cause such a shock?

Accepted Answer

A) an increase in the net tax rate 
B) a decrease in firms' desired investment expenditures 
C) an increase in factor prices 
D) a decrease in labour productivity 
E) a decrease in the world price of oil

Exam 23: Output and Prices in the Short Run

The economy's aggregate supply (AS) curve is assumed to slope upward because

FIGURE 23-4 -Refer to Figure 23-4.Suppose the Canadian economy is initially in equilibrium at point A.An unexpected shock then shifts both the AD and the AS curves as shown and results in a new equilibrium represented by point B.Which of the following events could cause such a shock?