Exhibit 5.4

-Refer to Exhibit 5.4, which shows the aggregate demand and supply curves for the United States. A rightward shift of the aggregate supply curve from AS to AS' is likely to be caused by _____
A) an increase in resource prices, improved technology, or an extension of patent protection.
B) a decrease in resource prices, improved technology, or an extension of patent protection.
C) a decrease in resource prices, improved technology, or a shortening of patent protection.
D) an appreciation of the dollar, higher inflation in Europe, or a decrease in resource prices.
E) a depreciation of the dollar, higher inflation in Asia, or improved technology.

Question

Exhibit 5.4
 
-Refer to Exhibit 5.4, which shows the aggregate demand and supply curves for the United States. A rightward shift of the aggregate supply curve from AS to AS' is likely to be caused by _____
A) an increase in resource prices, improved technology, or an extension of patent protection. 
B) a decrease in resource prices, improved technology, or an extension of patent protection. 
C) a decrease in resource prices, improved technology, or a shortening of patent protection. 
D) an appreciation of the dollar, higher inflation in Europe, or a decrease in resource prices. 
E) a depreciation of the dollar, higher inflation in Asia, or improved technology.

Quizplus · Accepted Answer

A rightward shift of the aggregate supply curve is caused by factors that increase the ability of firms to produce goods and services at each price level, such as a decrease in resource prices or improved technology. An extension of patent protection may also encourage innovation and increase supply, but it is not listed as a choice. Conversely, an increase in resource prices or a shortening of patent protection would decrease supply, shifting the curve to the left. Choices D and E are unrelated to aggregate supply.

Exhibit 5.4 -Refer to Exhibit 5.4, Which Shows the Aggregate Demand and the Aggregate