The Short-Run Aggregate Supply Curve Shifts to the Right When

question 68

Multiple Choice

The short-run aggregate supply curve shifts to the right when

• A)output gap is higher.
• B)output gap is lower.
• C)expected inflation is higher.
• D)expected inflation is lower.

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Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogenous products, and no barriers to entry or exit, leading to price takers rather than price makers.

Cost Functions

Mathematical representations that describe how production costs change with changes in the level of output.

Technology 2

Refers to the application of scientific knowledge for practical purposes, especially in industry, often implying the use of newer or second generation technologies.

Long-Run Cost Function

A mathematical relationship expressing the lowest cost at which a firm can produce any given level of output in the long run, when all input factors are variable.