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:

Surplus

An amount of something left over when requirements have been met; an excess of production or supply over demand.

Being In The Black

A financial term indicating a company or individual is making a profit or has a positive balance.

Deficit

A shortfall or deficiency, such as in a budget or in the amount of a required substance.

Being In The Red

A financial term indicating that a business or individual is operating at a loss or spending more money than is being earned.