Chapter 9.2

Question 1

Aggregate supply

Answer 1

The total quantity of goods and services produced in an economy over a particular time period at different price levels

Question 2

Short-run aggregate supply curve

Answer 2

Shows the relationship between the price level and the quantity of real output produced by firms when resource prices do not change

Question 3

Causes of changes in short-run aggregate supply

Answer 3

Changes in wages
Changes in non-labor prices
Changes in indirect taxes
Changes in subsidies offered to businesses
Supply shocks

Question 4

When does the equilibrium level of output occur in the AD-AS model?

Answer 4

When aggregate demand intersects aggregate supply

Question 5

When is there short run equilibrium and what does it determine?

Answer 5

When AD intersects with SRAS, determines the price level, level of real GDP and the level of employkent