The long-run aggregate supply curve:
A) is affected by the price level.
B) never moves.
C) shifts to the right when the economy experiences economic growth.
D) shifts to the left when the economy experiences economic growth.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve shifts to the right when the economy experiences economic growth. This is because growth in the economy means an increase in potential output, which is reflected as an outward shift of the long-run aggregate supply curve. The long-run aggregate supply curve is not affected by the price level or by short-term changes in the economy, and it never moves in response to these factors. It also does not shift to the left in response to economic growth.

The Long-Run Aggregate Supply Curve