Exhibit 10.3

-Refer to Exhibit 10.3, which shows an aggregate demand-aggregate supply model. The shift from AS to AS' represents a(n) _____
A) increase in short-run aggregate supply.
B) increase in long-run aggregate supply.
C) decrease in short-run aggregate supply.
D) decrease in long-run aggregate supply.
E) decrease in the aggregate quantity demanded.

Question

Exhibit 10.3
 
-Refer to Exhibit 10.3, which shows an aggregate demand-aggregate supply model. The shift from AS to AS' represents a(n) _____
A) increase in short-run aggregate supply. 
B) increase in long-run aggregate supply. 
C) decrease in short-run aggregate supply. 
D) decrease in long-run aggregate supply. 
E) decrease in the aggregate quantity demanded.

Quizplus · Accepted Answer

The shift from AS to AS' represents an increase in short-run aggregate supply. This is indicated by the shift of the AS curve to the right, which shows that at each price level, firms are able to produce more output due to factors such as lower input costs or improved technology.

Exhibit 10.3 -Refer to Exhibit 10.3, Which Shows an Aggregate Demand-Aggregate Supply