What can cause an increase in the LAS?
A)An increase in nominal wage rates.
B)A decrease in taxes.
C)Technological improvement.
D)A leftward shift in the AS curve.

Question

Quizplus · Accepted Answer

Technological improvement can cause an increase in the LAS as it increases productivity and output without necessarily causing an increase in input cost. An increase in nominal wage rates (A) would increase costs and shift the AS curve leftward. A decrease in taxes (B) can provide consumers more disposable income and may increase spending, but it would not necessarily increase the LAS. A leftward shift in the AS curve (D) implies a decrease in output supply, which is the opposite of an increase in the LAS.

What Can Cause an Increase in the LAS