Diagram 1 -Refer to Diagram 2 Above.Shifting the Aggregate Supply Curve to Aggregate

question 29

Multiple Choice

Diagram 1

-Refer to Diagram 2 above.Shifting the aggregate supply curve to the right

• A)makes no change to the full employment level of output.
• B)increases the full employment level of output.
• C)decreases the full employment level of output.
• D)leads to a change in aggregate demand.

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Definitions:

Actual Inflation

The real rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Natural Rate

The level of any economic factor, such as unemployment or interest rates, that is unaffected by short-term fluctuations and is determined by long-term factors.

Aggregate-Supply Curve

A curve that shows the quantity of goods and services that firms choose to produce and sell at each price level

Trade-Off

An exchange where getting something of value requires giving up something else of value, typically used in the context of making decisions with limited resources.