Which of the following supply shocks would shift the long-run aggregate supply curve outward?
A) an increase in gasoline taxes
B) an increase in the cost of raw materials
C) an increase in the amount and cost of government regulation
D) an increase in agricultural output

Question

Which of the following supply shocks would shift the long-run aggregate supply curve outward?  
A) an increase in gasoline taxes 
B) an increase in the cost of raw materials 
C) an increase in the amount and cost of government regulation 
D) an increase in agricultural output

Quizplus · Accepted Answer

An increase in agricultural output would increase the availability of resources and therefore shift the long-run aggregate supply curve outward. The other choices would all increase the costs of production and decrease the availability of resources, causing the long-run aggregate supply curve to shift inward.

Which of the Following Supply Shocks Would Shift the Long-Run