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11 & 12
Use the following graph for questions 11 & 12. AS, Price level Real domestic output, GDP 11. In the above diagram, a shift fr
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11. Shortrun aggregate supply curve shift to the left due to the increase in taxes, increase in wages and increase in resource prices either domestic or imported. There is a leftward shift in shortrun aggregate supply curve from AS1 to AS3. This is due to the increase in domestic resource prices. The suppliers are able to produce more at lower cost.

Answer: C. increase in the prices of domestic resources.

12. The shortrun aggregate supply curve shift to the right due to the decrease in taxes, wages and resource prices (imported or domestic). The aggregate supply curve shift to the right from AS1 to AS2 as a result of decrease in the prices of imported resources.

Answer: B. decrease in the prices of imported resources.

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