Question

g The aggregate supply curve shifts A. rightward if the money wage rate falls. B. leftward if the aggregate demand curve shifts leftward. C. rightward if potential GDP decreases. D. leftward if potential GDP increases. E. rightward if the money wage rate rises.

Answer 1

Answer:

The correct option to the question above is option A "rightward if the money wage rate falls."

Explanation:

The aggregate supply curve is a graphical illustration of how the total quantity of goods and services is available for a given price and time.

When the aggregate supply curve shifts to the right, it increases. While, when the aggregate supply curve shifts to the left, it decreases.

An increase in the aggregate supply curve shows a fall in price, which makes a high price level resulting in a greater supply of real GDP.

Money wages is the amount of money paid in wages. Money wages is indirectly proportional to real wages. The aggregate supply curve decreases if the money wage rate increases and the aggregate supply curve increases when the money wage rate falls.

Aggregate supply is affected by GDP. When A GDP decreases, it also decreases aggregate supply.