Use the table below to answer the following questions.
Table 26.3.3

-Refer to Table 26.3.3. With no interference from the central bank or the government, the
A)short-run aggregate supply curve will shift rightward.
B)short-run aggregate supply curve will shift leftward.
C)long-run aggregate supply curve will shift rightward.
D)long-run aggregate supply curve will shift leftward.
E)Both A and C will occur.

Question

Use the table below to answer the following questions.
Table 26.3.3
 
-Refer to Table 26.3.3. With no interference from the central bank or the government, the
A)short-run aggregate supply curve will shift rightward. 
B)short-run aggregate supply curve will shift leftward. 
C)long-run aggregate supply curve will shift rightward. 
D)long-run aggregate supply curve will shift leftward. 
E)Both A and C will occur.

Quizplus · Accepted Answer

Without interference from the central bank or government, the economy is free to adjust to market conditions. This means that if there is an increase in factors of production or technological improvements, the short-run aggregate supply curve will shift rightward as businesses can produce more output at a given price level. However, in the long run, the economy will adjust fully, and the long-run aggregate supply curve will shift rightward due to an increase in potential output.

Use the Table Below to Answer the Following Questions