When an economy has a more stable and well-developed financial system,it is reasonable to expect
A) an upward movement along the long-run aggregate supply curve.
B) a downward movement along the long-run aggregate supply curve.
C) a leftward shift of the long-run aggregate supply curve.
D) a rightward shift of the long-run aggregate supply curve.
E) no change in the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

A stable and well-developed financial system will enhance the effectiveness of investment and capital accumulation, leading to an increase in productivity and potential output. Therefore, a rightward shift of the long-run aggregate supply curve is expected.

When an Economy Has a More Stable and Well-Developed Financial