An increase in labour supply
A)shifts FE to the right.
B)shifts IS to the right.
C)shifts LM to the right.
D)increases capital.

Question

Quizplus · Accepted Answer

An increase in labour supply would shift the production function to the right, meaning that more output can be produced from the same amount of inputs. This leads to an increase in potential output and the full employment level of output, shifting the FE curve to the right.

An Increase in Labour Supply