Which of the following would shift the LRAS curve to the left?
A)an increase in the size of the labor force
B)a reduction in the quality of the labor force
C)a reduction in the cost of using computers
D)a decrease in the price level
E)an increase in the price level

Question

Quizplus · Accepted Answer

A reduction in the quality of the labor force would lead to a decrease in productivity and efficiency, ultimately lowering the potential output of the economy and shifting the LRAS curve to the left. A decrease in the price level (D) or an increase in the price level (E) would not directly impact the LRAS curve, as it represents the economy's potential output in the long-run, independent of changes in the price level. An increase in the size of the labor force (A) would shift the LRAS curve to the right as it would increase the economy's potential output. A reduction in the cost of using computers (C) would shift the SRAS curve to the right in the short-run due to lower input costs, but it would not impact the LRAS curve as it does not have a permanent effect on the economy's potential output.

Which of the Following Would Shift the LRAS Curve to the Left