Exhibit 14-3 Aggregate Supply and Demand Curves

question 117

Multiple Choice

Exhibit 14-3 Aggregate supply and demand curves

-A shift in the aggregate supply curve in Exhibit 14-3 from AS₁ to AS₂ would be caused by a(n) :

• A) increase in consumer spending.
• B) increase in input prices.
• C) decrease in input prices.
• D) decrease in real output.

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Definitions:

Explicit Costs

Direct, out-of-pocket expenses incurred in the operation of a business or the execution of a transaction.

Production

The process or method of creating goods and services through the combination of labor, materials, and technology.

Fixed Inputs

Resources in production that remain constant in quantity regardless of the level of output or activity.

Variable Inputs

Resources used in production that vary with the level of output, such as raw materials.