Which one of the following newspaper quotations describes a leftward shift of the LAS curve?
A)"Recent higher wage settlements are expected to cause higher inflation this year."
B)"The increase in consumer spending is expected to lead to inflation, without any increase in real GDP."
C)"The decrease in consumer spending may lead to a recession."
D)"The recent tornadoes destroyed many factories in Calgary and Edmonton."
E)"Growth has been unusually high the last few years due to more women entering the work force."

Question

Quizplus · Accepted Answer

A leftward shift of the Long-Run Aggregate Supply (LAS) curve indicates a decrease in the potential output of the economy, often due to a reduction in the productive capacity. The destruction of factories, as mentioned in option D, directly reduces the economy's ability to produce goods and services, thus representing a leftward shift of the LAS curve.

Which One of the Following Newspaper Quotations Describes a Leftward