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QUESTION
·As the price level decreases from P1to P3,andthe economy moves from
· As the price level decreases from P1to P3, andthe economy moves from
a1to a3 along AS1, the short-run aggregate supply curve, what is the subsequent effect on the demand for factor inputs and nominal wages?
· Why does the short-run aggregate supply curve shift from AS1 to AS3, causing the economy to move from a3to c1?
ASLRAS2AS1b102AS3Price levelP 201P103C1P3Real domestic output(b)Long-run aggregate supply