Lesson 4.2.2.5

4.2.2.5 Determinants of short-run aggregate supply Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.2.5, Determinants of short-run aggregate supply: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. What are the main determinants of short-run aggregate supply?

    • The price level and production costs
    • Government spending and taxes on households
    • Consumer incomes and interest rates
    • Population size and migration patterns

  2. Which change would shift the short-run aggregate supply curve to the left?

    • A rise in money wage rates paid by firms
    • A fall in the price of raw materials
    • A fall in business taxation
    • A rise in labour productivity, which reduces the cost of each unit of output and so raises the supply of goods at each price

  3. Which change would shift the short-run aggregate supply curve to the right?

    • A fall in the price of raw materials used by firms
    • A rise in money wage rates
    • An increase in business taxation, which raises the costs firms must pay on each unit of output they produce for sale
    • A rise in the cost of components used by firms

  4. Which change moves along the short-run aggregate supply curve rather than shifting it?

    • A rise in productivity
    • A rise in the general price level
    • A rise in business taxation
    • A rise in money wage rates, which raises firms' costs and so shifts the whole short-run aggregate supply curve

  5. A rise in business taxation on firms will most likely cause short-run aggregate supply to:

    • Shift to the left
    • Move along the curve to a higher price level
    • Shift to the right
    • Remain unchanged

  6. Why does higher labour productivity shift short-run aggregate supply to the right?

    • Higher productivity raises the price level, so output falls
    • Workers demand higher wages, so firms reduce their output
    • Each unit of output costs less in labour, so firms supply more at each price level
    • Productivity affects only aggregate demand by raising incomes, not aggregate supply, which depends on the price level alone

  7. Which of the following is a business cost that can shift short-run aggregate supply?

    • The level of consumer confidence, which affects how much households choose to spend on goods and services in the economy
    • The price of imported raw materials
    • The rate of growth of exports
    • The level of government borrowing

  8. A 10% rise in money wages occurs with no change in productivity or output prices. What is the most likely effect on short-run aggregate supply?

    • SRAS shifts to the left, so firms supply less output at each price
    • SRAS shifts to the right, so firms supply more output at each price
    • SRAS does not change, because only demand responds to wages
    • SRAS moves down along the curve to a lower price level

  9. The price of oil, an important raw material, doubles. Which combination of outcomes is most consistent with a leftward shift in SRAS?

    • The price level falls and real output rises
    • The price level and real output both fall
    • The price level and real output both rise
    • The price level rises and real output falls

  10. A government cuts employers' National Insurance contributions. What is the most likely effect on short-run aggregate supply?

    • SRAS shifts to the left, because firms' labour costs fall
    • SRAS is unaffected, because it only depends on consumer spending
    • SRAS shifts to the right, because firms' labour costs fall
    • SRAS moves along the curve to a higher price level

  11. A firm's unit cost is 20 pounds and the selling price is 25 pounds. Productivity improves so unit cost falls to 18 pounds, with the price unchanged. What does this most likely imply for aggregate supply?

    • Aggregate supply is unchanged because the selling price has not changed, so firms have no reason to alter output at all
    • Firms will reduce output because profit per unit has risen
    • Aggregate supply shifts left because firms need fewer workers
    • Firms are willing to supply more output at each price, shifting SRAS to the right

  12. A fall in the exchange rate raises the sterling cost of imported raw materials used by UK firms. What is the most likely effect on short-run aggregate supply?

    • SRAS shifts to the right
    • SRAS moves along the curve to a lower price level
    • SRAS is unaffected because raw materials are not part of supply
    • SRAS shifts to the left

  13. Why might a wage increase that shifts SRAS left be partly offset by rising productivity?

    • Productivity lowers unit labour costs, so it offsets some of the cost increase from higher wages
    • Productivity increases consumer demand, which shifts aggregate demand instead
    • Productivity raises money wages even further, so the shift is larger
    • Productivity affects only long-run aggregate supply, so it has no short-run effect on firms' costs or the output they supply

  14. A firm's costs rise sharply while demand is unchanged. Which pairing best describes what happens to the economy in the short run?

    • The price level rises and real output falls
    • Real output rises and unemployment rises
    • The price level and real output both rise
    • The price level falls and real output rises

  15. Why is the short-run aggregate supply curve upward sloping?

    • Consumers buy more when prices are higher, which raises output
    • The curve slopes upward only because of changes in the exchange rate
    • Wages and some costs adjust slowly, so higher prices raise firms' profits and encourage more output in the short run
    • Higher prices reduce firms' costs of production in every sector, so firms are led to supply less output at each level of prices

  16. A rise in business taxation and a rise in money wages both occur in the same year. Which statement is correct?

    • Both shift SRAS to the left, so the combined effect reduces short-run supply further
    • Only the tax rise affects SRAS, because wages do not affect firms' costs and are paid by households rather than by firms
    • The two effects cancel out, so SRAS is unchanged
    • Both shift SRAS to the right, because they raise government revenue

  17. A firm faces a 4% rise in money wages but its productivity rises by 2%. Approximately what is the change in unit labour cost?

    • About minus 2%
    • About 6%
    • About 2%
    • About 4%

  18. An economy's wage rates rise by 6%, while output prices remain constant for a time. How does this affect firms' short-run supply decisions?

    • Firms' costs rise and they supply less output at the existing price level
    • Firms' costs fall and they supply more output at the existing price level
    • Firms do not change supply, because prices are constant
    • Firms become more productive, so they supply more output at the existing price level

  19. Which statement best describes why a leftward shift of SRAS creates a difficult policy problem?

    • It raises the price level while reducing output, so the policy aim of stable prices conflicts with high output
    • It lowers the price level while raising output, so inflation falls and employment rises, with no trade-off for policy makers
    • It affects only the long run, so it has no short-run policy relevance
    • It shifts aggregate demand, so there is no need for any policy response

  20. A firm's wage bill and raw material costs both fall sharply. What does this do to short-run aggregate supply?

    • It moves up along the curve as the price level rises, so firms supply more output without any change in their costs
    • It shifts to the left, so firms supply less output at each price level
    • It is unchanged, because costs affect only long-run supply
    • It shifts to the right, so firms supply more output at each price level

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