A-LevelEconomicsThe macroeconomy9708/12 · Feb/Mar 2019 · Q271 Mark
The diagram shows aggregate demand (AD) and aggregate supply (AS) in an economy. The initial equilibrium is at point E. What causes shifts in the aggregate supply curve from AS to AS₁ and from AS to AS2?
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Ashift from AS to AS1: change in AD from E to W, shift from AS to AS2: change in AD from E to X
Bshift from AS to AS1: increase in price level from P to P₁, shift from AS to AS2: decrease in price level from P to P2
Cshift from AS to AS1: increase in productivity of capital, shift from AS to AS2: fall in the returns to capital
Dshift from AS to AS1: shortages of skilled labour, shift from AS to AS2: improvements in training of workforce
✓ Correct answer
D: shift from AS to AS1: shortages of skilled labour, shift from AS to AS2: improvements in training of workforce
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