Question

The aggregate supply curve can be viewed two different ways , the Long run and short run. which of the following occurs during a short-run?
A. wages are always dropping in the short-run
B. wages are always rising in the short-run
C. wages are flexible in the short-run

Answer 1

The aggregate supply curve can be viewed two different ways , the Long run and short run. A. wages are always dropping in the short-run occurs during a short-run.

Explanation:

• Aggregate supply in the short run is best defined as the total production of goods and services available in an economy at different price levels while some resources to produce are fixed.
• The short-run aggregate supply curve is upward sloping because the quantity supplied increases when the price rises. In the short-run, firms have one fixed factor of production
• When the curve shifts outward the output an real GDP increase at a given price.
• In the short-run, examples of events that shift the aggregate supply curve to the right include a decrease in wages, an increase in physical capital stock, or advancement of technology. The short-run curve shifts to the right the price level decreases and the GDP increases.
• The short-run aggregate supply equation is: Y = Y* + α(P-Pe).