Employment and (total) potential GDP increase if the

Question

Quizplus · Accepted Answer

If the labor supply curve shifts rightward while the labor demand curve does not shift, both employment and total potential GDP will increase. This is because there will be more workers available to fill open positions, increasing employment, and an increase in the number of workers can lead to an increase in production, increasing total potential GDP. A leftward shift in the labor demand curve in option A and C would result in a decrease in both employment and total potential GDP. Option D is incorrect because one of the options is correct.

Employment and (Total) Potential GDP Increase If the