Exhibit 8-4 -Refer to Exhibit 8-4.A Shift in Short-Run Aggregate Supply from Aggregate

question 143

Multiple Choice

Exhibit 8-4
-Refer to Exhibit 8-4.A shift in short-run aggregate supply from SRAS₂ to SRAS₁ would have been the result of

• A) a decrease in the price level.
• B) an increase in the price level.
• C) an increase in wage rates.
• D) a decrease in wage rates.

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and quantities.

Demand Decreases

A situation where the quantity of a product or service sought by buyers is less than it was previously, often leading to lower prices.

Supply Increases

Supply increases refer to a situation in which the availability of a product or service in the market rises, which can be due to factors such as improved production methods or increased raw material availability.