1. Profit-maximizing behaviour on the part of firms explains why the short-run aggregate supply curve is upward-sloping. Is this statement true, false, or uncertain? Explain your answer.
2.If huge budget deficits cause the public to think that there will be higher inflation in the future, what is likely to happen to the short-run aggregate supply curve when budget deficits rise?
3. If a pill were invented that made workers twice as productive but their wages did not change, what would happen to the position of the short-run aggregate supply curve?