The diagram illustrates aggregate demand (AD) and aggregate supply (AS) in an economy. The starting equilibrium is at point E. What leads to the movement of the aggregate supply curve from AS to AS1 and from AS to AS2?
- Ashift from AS to AS1: change in AD from E to W; shift from AS to AS2: change in AD from E to X
- Bshift from AS to AS1: increase in price level from P to P1; shift from AS to AS2: decrease in price level from P to P2
- Cshift from AS to AS1: increase in productivity of capital; shift from AS to AS2: fall in the returns to capital
- Dshift from AS to AS1: shortages of skilled labour; shift from AS to AS2: improvements in training of workforce