Short Term Aggregate Supply

Question 1

short-run aggregate supply

Answer 1

• a measure of the relationship between average price levels and real output levels in a short term situation of increase production levels at a desired higher price level
• the increase in output is not sustainable, because in order to maintain the new level of production, businesses would have to increase wages or hire more workers, which would decrease their profits
• a good example of this would be the short-term increase in production around the holiday season

Question 2

x-axis

Answer 2

real output

Question 3

y-axis

Answer 3

average price level

Question 4

if average price level decreases, what happens to the real output

Answer 4

it decreases

Question 5

relationship between APL and RO creates which of the following for the SRAS curve

Answer 5

positive result

Question 6

which can occur when production is at a high level in a short-run

Answer 6

increase in wage

Question 7

increase in aggregate price will do what

Answer 7

increase real output