12.3 Shocks to the System

question 81

Multiple Choice

12.3 Shocks to the System
Refer to the information provided in Figure 12.3 below to answer the questions that follow. Figure 12.3
-Refer to Figure 12.3. Assume the economy is currently at Point A on aggregate supply curve AS₁. A decrease in inflationary expectations that causes firms to decrease their prices

• A) shifts the aggregate supply curve to AS₀.
• B) shifts the aggregate supply curve to AS₂.
• C) moves the economy to Point C on aggregate supply curve AS₁.
• D) moves the economy to Point B on aggregate supply curve AS₁.

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Definitions:

Union Wages

Wages that are negotiated by labor unions on behalf of their members, typically resulting in higher pay and better benefits compared to non-union wages.

Union Jobs

Positions of employment that are represented by a labor union, offering workers collective bargaining rights with their employers regarding wages, benefits, and working conditions.

Allocation Of Labor

The distribution of labor resources among different tasks, jobs, or industries to maximize efficiency or output.

Inefficient And Inequitable

Situations or systems that do not maximize resources or distribute outcomes fairly among participants.