-In the above figure, B is the current long-run aggregate supply curve and E is the current
Short-run aggregate supply curve. If there is an increase in the full -employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve
A) remain B and E.
B) shift to A and F, respectively.
C) shift to C and F, respectively.
D) shift to A and D, respectively.

Question

-In the above figure, B is the current long-run aggregate supply curve and E is the current
Short-run aggregate supply curve. If there is an increase in the full -employment quantity of labor, then the long-run aggregate supply curve and the short-run aggregate supply curve
A) remain B and E. 
B) shift to A and F, respectively. 
C) shift to C and F, respectively. 
D) shift to A and D, respectively.

Quizplus · Accepted Answer

An increase in the full-employment quantity of labor increases the potential output, shifting the long-run aggregate supply curve to the right (to C). The short-run aggregate supply curve also shifts to the right (to F) as more labor increases production capacity.

-In the Above Figure, B Is the Current Long-Run Aggregate