Not a previously submitted question. Please answer all parts 5. Why the aggregate supply curve slopes upward in theshort runIn the short run, the quantity of output supplied by firms cadeviate from the natural level of output if the actual pricelevel deviates from the expected price level in the economnumber of theories explain reasons why this might happerFor example, the sticky-price theory asserts that the outpprices of some goods and services adjust slowly to changin the price level. Suppose firms announce the prices for thproducts in advance, based on an expected price level of 1for the coming year. Many of the firms sell their goodsthrough catalogs and face high costs of reprinting if theychange prices. The actual price level turns out to be 110.Faced with high menu costs, the firms that rely on catalogsales choose not to adjust their prices. Sales from catalogwilland firms that rely on catalogs will respond bythe quantity of output they supply. If enough firms facehigh costs of adjusting prices, the unexpected increase inprice level causes the quantity of output supplied tothe natural level of output in the short run.Suppose the economy's short-run aggregate supply (AS)curve is given by the following equation:Quantity of Output Supplied Natural Level of Output + ax (Price Level Actual-Price Level Expected)The Greek letter represents a number that determines homuch output responds to unexpected changes in the pricelevel. In this case, assume that a $2 billion. That is, when theactual price level exceeds the expected price level by 1, thequantity of output supplied will exceed the natural level ofoutput by $2 billion.Suppose the natural level of output is $60 billion of real GDand that people expect a price level of 110.On the following graph, use the purple line (diamond symbol Suppose the economy's short-run aggregate supply (AS)curve is given by the following equation:Quantity of Output Supplied = Natural Level of Output + ax (Price Level Actual-Price Level Expected)The Greek letter & represents a number that determines homuch output responds to unexpected changes in the pricelevel. In this case, assume that a = $2 billion. That is, when theactual price level exceeds the expected price level by 1, thequantity of output supplied will exceed the natural level ofoutput by $2 billion.Suppose the natural level of output is $60 billion of real GDand that people expect a price level of 110.On the following graph, use the purple line (diamond symbolplot this economy's long-run aggregate supply (LRAS) curveThen use the orange line segments (square symbol) to ploteconomy's short-run aggregate supply (AS) curve at each ofthe following price levels: 100, 105, 110, 115, and 120.125120110100958580750 102050 60OUTPUT (Billions of dollars)80 90 100DASLRASThe short-run quantity of output supplied by firms will fallshort of the natural level of output when the actual price lethe price level that people expected.

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The SW theory estimates that the worker's pay will in general answer to changes in organization…

The short-run quantity of output supplied by firms will fall short of the natural level of output when the actual price le the price level that people expected.