Answer to Question #102119 in Microeconomics for komalpreet kaur

Question

Draw an aggregate demand/aggregate supply diagram where equilibrium occurs below full
employment level of output. Now show the impact of a leftward shift in the aggregate supply
curve. What developments might cause such a shift?

Answer 1

Examples of events that shift the aggregate supply curve to the left include an increase in wages, a decrease in physical capital stock, or use of expired technology.