Everything Else Held Constant,if Aggregate Output Is to the ________

question 34

Multiple Choice

Everything else held constant,if aggregate output is to the ________ of the IS curve,then there is an excess supply of goods which will cause aggregate output to ________.

• A)right;fall
• B)right;rise
• C)left;fall
• D)left;rise

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Definitions:

Backward-Bending

Refers to a labor supply curve that bends backwards at higher wage rates, indicating that higher wages can lead to less labor supplied due to increased leisure preference.

Substitution Effect

A change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.

Income Effect

The alteration in a person's or an economy's earnings and its effect on the amount of a good or service they want to purchase.

Labor Supply Curve

Represents the relationship between the wage rate and the quantity of labor that workers are willing to supply, typically showing that higher wages attract a larger labor supply.