Check Your Understanding

190

  1. Question

    Determine the effect on short-run aggregate supply of each of the following events. Explain whether it represents a movement along the SRAS curve or a shift of the SRAS curve.

    1. A rise in the consumer price index (CPI) leads producers to increase output.

    2. A fall in the price of oil leads producers to increase output.

    3. A rise in legally mandated retirement benefits paid to workers leads producers to reduce output.

  2. Question

    Suppose the economy is initially at potential output and the quantity of aggregate output supplied increases. What information would you need to determine whether this was due to a movement along the SRAS curve or a shift of the LRAS curve?