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

question 42

Multiple Choice

Why does 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:

Book Value

The net value of a company's assets minus its liabilities, essentially representing the total value if it were liquidated according to the balance sheet.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, represented by the equity stockholders have from share investments and retained earnings.

Stock Traded

Shares of a company that are bought and sold on a stock exchange platform.

Shares

Shares represent the portion of ownership in a company or an investment that entitles the holder to a proportional claim on profits, which may be paid out as dividends if declared.