Use the Following to Answer Questions

question 119

Multiple Choice

Use the following to answer questions:
Figure: AD-AS Model I
-(Figure: AD-AS Model I) Refer to Figure: AD-AS Model I. If the economy is at point X, nominal wages _____, and the _____ curve shifts _____ until the economy reaches long-run equilibrium.

• A) fall; aggregate demand; left
• B) rise; aggregate demand; right
• C) fall; short-run aggregate supply; right
• D) fall; short-run aggregate supply; left

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Definitions:

Supply Shortages

A situation where the demand for a product or service exceeds the available supply, often leading to increased prices and scarcity.

Price Increases

A rise in the cost of goods or services, often due to factors like inflation, increased production costs, or higher demand.

Local Nuances

Pertains to the subtle and specific features or variations within a local context or culture, often crucial for understanding and operating effectively within that locale.

Host Country

A country in which an international business operates.