If the full-employment quantity of labor increases, then the
A) SAS curve shifts rightward and the LAS curve does shifts leftward.
B) SAS curve shifts rightward and the LAS curve does not shift.
C) SAS curve shifts rightward and the LAS curve shifts rightward.
D) LAS curve shifts rightward and the SAS curve does not shift.

Question

Quizplus · Accepted Answer

An increase in the full-employment quantity of labor increases the potential output of the economy, shifting the Long-Run Aggregate Supply (LAS) curve to the right. The Short-Run Aggregate Supply (SAS) curve also shifts rightward as more labor can produce more goods and services in the short run.

If the Full-Employment Quantity of Labor Increases, Then the