The long-run aggregate supply curve shifts to the right when there is
A)a decrease in the total amount of capital in the economy.
B)a decrease in the total amount of labor supplied in the economy.
C)a decrease in the available technology.
D)a decline in the natural rate of unemployment.

Question

Quizplus · Accepted Answer

A decline in the natural rate of unemployment leads to a larger pool of available workers for businesses to hire from, which increases the potential output of the economy, thereby shifting the long-run aggregate supply curve to the right. Options A, B, and C would all lead to a decrease in potential output and therefore shift the curve to the left.

The Long-Run Aggregate Supply Curve Shifts to the Right When