The long-run aggregate supply curve will shift to the left when
A)population decreases.
B)the price level increases.
C)technology improves.
D)new sources of oil are discovered.

Question

Quizplus · Accepted Answer

A decrease in population leads to a decrease in the labor force, which decreases the production capacity of the economy and shifts the long-run aggregate supply curve to the left. The other options, such as an increase in price level or improvement in technology, may affect short-run aggregate supply, but they do not necessarily shift the long-run aggregate supply curve. The discovery of new sources of oil may increase the production capacity temporarily, but it does not shift the long-run aggregate supply curve as it is based on factors such as capital stock, labor force, and technology.

The Long-Run Aggregate Supply Curve Will Shift to the Left