If the full-employment quantity of labor increases, then the
A) LAS curve shifts rightward and the SAS curve does not shift.
B) SAS curve shifts rightward and the LAS curve does not shift.
C) SAS curve shifts rightward and the LAS curve shifts rightward.
D) SAS curve shifts rightward and the LAS curve does shifts leftward.

Question

Quizplus · Accepted Answer

The full-employment quantity of labor is the maximum amount of labor that can be employed without causing inflation. If this quantity increases, then the SAS curve will shift rightward because more goods and services can be produced at each price level. The LAS curve will also shift rightward because more labor is available to produce goods and services.

If the Full-Employment Quantity of Labor Increases, Then the