Which of the following will most likely increase the economy's long-run aggregate supply?
A)advances in technology
B)unfavorable weather conditions in agricultural areas
C)an increase in the expected inflation rate
D)a low rate of investment

Question

Quizplus · Accepted Answer

Advances in technology will increase productivity and efficiency, leading to lower production costs and an increase in the economy's potential output. This will shift the long-run aggregate supply curve to the right. Unfavorable weather conditions in agricultural areas will decrease the supply of agricultural products, leading to a shift in the short-run aggregate supply curve but no effect on the long-run curve. An increase in the expected inflation rate will lead to higher costs and less investment, shifting the short-run aggregate supply curve to the left. A low rate of investment will also lower productivity and efficiency, shifting the long-run aggregate supply curve to the left.

Which of the Following Will Most Likely Increase the Economy's