If stricter immigration laws are imposed and many foreign workers in Canada are forced to go back to their home countries,
A)the long-run aggregate supply curve will shift to the right.
B)the long-run aggregate supply curve will shift to the left.
C)we will move up along the long-run aggregate supply curve.
D)we will move down along the long-run aggregate supply curve.
E)the short-run aggregate supply curve will shift to the right.

Question

Quizplus · Accepted Answer

The imposition of stricter immigration laws would reduce the number of foreign workers in Canada, which would lead to a reduction in potential output or the productive capacity of the economy. This would mean a decrease in the long-run aggregate supply (LRAS) curve, shifting it to the left. This shift could lead to an increase in the price level and a decrease in real GDP in the short run as the economy adjusts to the new equilibrium point on the aggregate demand-aggregate supply model. Therefore, the correct answer is (B) the long-run aggregate supply curve will shift to the left.

If Stricter Immigration Laws Are Imposed and Many Foreign Workers