Question

52. Graphically demonstrate the effect of each of the following on either the short-run aggregate supply (SAS) curve or the long-run aggregate supply (LAS) curve. Be sure to label all axes u Businesses find that they are unable to produce more iq. output without having to pay more wages or increasing their costs of capital. ir. Productivity rises by 3% and input prices rise by 5%. is. A forest fire destroys a significant portion of Canada. it. The country's currency depreciates dramatically. u. Productivity rises by 3% and wages rise by 3%.

Answer 1

Graphically demonstrate the effect of each of the following on either the short run aggregate supply (SAS) Business find that they are unable to produce more output without having to pay more wages or increasing their costs of capital This will increase the cost of production and hence a decrease in aggregate. So short-run supply curve will shift to left Productivity rises 3% and x input rises by 5% This will increase aggregate supply permanently shift the long-run aggregate supply curve the right. \r\n A forest fire destroys a significant portion of canada. This will decrease aggregates supply permanently and shift the long-run aggregate supply curve to the left. The country's currency depreciates dramatically Depreciation leads to an increase in exports and decreases in imports. As a result, there is job creation which increases income and so aggregate demand. It will not affect aggregate supply. \r\n productivity rises by 3% and wages rise by 3% A increase in productivity shifts LRAS curve to right.