The curve in the above figure will shift to the right when
A) the price level falls.
B) labor productivity increases.
C) population falls.
D) the proportion of the population that is elderly increases.

Question

Quizplus · Accepted Answer

The curve in the figure represents the long-run aggregate supply (LRAS) curve, which shows the potential output of an economy at different price levels when all the factors of production are utilized efficiently. An increase in labor productivity (output per worker) means that the economy can produce more goods and services with the same amount of labor, leading to an outward shift of the LRAS curve to the right. None of the other factors (falling price level, falling population, and increasing proportion of elderly population) affect the LRAS curve directly.

The Curve in the Above Figure Will Shift to the Right