True or False:
1. If wages increase without a corresponding increase in labor productivity, SRAS will shift to the left; but LRAS will not shift, because with the same supply of labor as before, potential output does not change.
2. Changes in input prices only affect SRAS if they reflect permanent changes in the supplies of those inputs.
3. Adverse supply shocks can increase the costs of production, shifting SRAS to the left; but once the temporary effects of these disasters have been felt, no appreciable change in the economy’s productive capacity occurs, so LRAS doesn’t shift as a result.
4. In long-run equilibrium, the economy operates at full employment, regardless of the level of the aggregate demand curve.
5. Short-run equilibrium can change only when the short-run aggregate supply curve shifts.
6. A change in aggregate demand will change RGDP in the short-run equilibrium, but not in the long run.
7. When short-run equilibrium occurs beyond the economy’s level of potential output, it results in an expansionary gap.
8. Demand-pull inflation causes a recessionary gap.