TUTORIAL 9

1. The total real output that various sectors at an economy willing to produce at different price
levels

P P

AS As

Y Y

- Short run aggregate supply - Long run aggregate supply

- Short run AS cureve has a positive slope meanwhile long run is vertical at full
employment

3. i. Salaries for workers remain fixed by contract for

ii. Firms are too slow to adjust wages

iii. Taxes, subsidies or economic regulation

Y (Income)

- If there are any rising in cost of production suc as price in taxes, it will shift to the left
P

Y (Income)

- Decrease of costs of production and increase in subsidies curve shift to the right

a) Productivity increase
P

As0 As1

Y (Income)

- When productivity increase, AS curve will shift to the right

b) Subsidies are available for natural resources

P

As0
As1

Y (Income)

- When there are subsidies are available for natural resources, As cureve will shit to the
right.
c) government imposes move export duties

As1
As0

Y (Income)

- When government imposes more export duties, As curve will shift to the left