Assume That an Economy Is Operating Beyond Its Productive Capacity

question 54

Multiple Choice

Assume that an economy is operating beyond its productive capacity and there is no government intervention.Suppose workers and other resource suppliers negotiate higher resource payments.What will be the effect on the short-run aggregate supply curve?  

• A) The short-run aggregate supply curve will shift leftward. 
• B) A leftward movement will occur along a fixed short-run aggregate supply curve. 
• C) The short-run aggregate supply curve will NOT shift. 
• D) The short-run aggregate supply curve will shift rightward.

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Definitions:

Flooding

A psychological treatment method where an individual is exposed to a large amount of an anxiety-producing stimulus in order to extinguish the fear response.

Graduated Exposure

A therapeutic technique where individuals are gradually exposed to their fears to reduce anxiety.

Unconscious Conflicts

Deep-seated tensions and struggles within an individual that they are not fully aware of but influence behaviors and emotions.

Irrational Thinking

Thought processes characterized by illogical or unreasonable conclusions, often leading to negative emotions or behaviors.