Why Might the Short-Run Aggregate Supply Curve Shift to the Right

question 115

Multiple Choice

Why might the short-run aggregate supply curve shift to the right in the long run, following a decrease in aggregate demand?

• A)Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices.
• B)Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.
• C)Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.
• D)Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

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Definitions:

Taxable Income

Taxable income is the amount of income used to calculate how much tax an individual or a company owes to the government in a given tax year.

Pretax Financial Income

Income of a company calculated before taxes are deducted, often compared to taxable income for tax planning.

Deferred Tax Asset

A tax benefit that arises from temporary differences between the tax and accounting treatment of assets and liabilities, to be utilized in future periods.

Income Taxes Payable

This account reflects the amount of income taxes a company owes to the government but has not yet paid, representing a liability on the balance sheet.