1. Determine the effect on short -run aggregate supply of each of the following events. Explain whether it represents a movement along the SRAS curve or a shift of the SRAS curve.

a. A rise in the consumer price index (CPI) leads producers to increase output.

b. A fall in the price of oil leads producers to increase output.

c. A rise in legally mandated retirement benefits paid to workers leads producers to reduce output.

Solutions appear at the back of the book.