Figure 7-7 -Refer to Figure 7-7. A shift from SRAS₁ to SRAS₂ could have been caused by all of the following except A) an increase in the consumer confidence index. B) an increase in payroll tax. C) a rise in health care costs which raises the cost of employing labor. D) terrorist attacks that destroys an economy's infrastructure.

Question

Quizplus · Accepted Answer

An increase in consumer confidence would typically lead to an increase in economic activity and a corresponding increase in the WLI, which would result in a shift to the right (i.e., an increase) in the WLI. The other factors listed (an increase in payroll tax, a rise in health care costs which raises the cost of employing labor, and terrorist attacks that destroy an economy's infrastructure) could potentially have a negative impact on economic activity and result in a leftward shift in the WLI.

Figure 7-7 -Refer to Figure 7-7. a Shift from SRAS1 to SRAS2

Figure 7-7 -Refer to Figure 7-7. a Shift from SRAS₁ to SRAS₂