Which of the following changes shifts the long-run aggregate supply curve to the right?
A) a demographic change that increases the labour supply
B) a decrease in the demand for labor
C) an increase in consumer confidence
D) a decrease in taxes (assuming Ricardian equivalence doesn't hold)

Question

Quizplus · Accepted Answer

A demographic change that increases the labor supply, such as an increase in immigration or an increase in the birth rate, would shift the long-run aggregate supply curve to the right. This is because there would be more workers available, which would increase the potential output of the economy. The other choices, B, C, and D, do not directly affect the long-run aggregate supply curve. A decrease in demand for labor would affect the short-run aggregate supply curve, while an increase in consumer confidence and a decrease in taxes would affect aggregate demand.

Which of the Following Changes Shifts the Long-Run Aggregate Supply