When the Aggregate Supply Curve Shifts Adversely, What Happens to the Relationship

question 159

Multiple Choice

When the aggregate supply curve shifts adversely, what happens to the relationship shown in the Phillips curve?

• A)It is reinforced, and made more applicable for policy.
• B)It is destroyed, and no longer applies for policy.
• C)It is unchanged, although the curve becomes less steep.
• D)It is unchanged, although the curve shifts inward and to the left.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive, typically representing the profit or gain from trade.

Total Surplus

The sum of consumer and producer surplus, measuring the overall benefit to society from the production and consumption of a good or service.

World Price

The international market price of a good or service, determined by global supply and demand.

Importer or Exporter

Entities that are involved in the trade of goods across international borders, where importers bring goods into a country and exporters send goods out of a country.