The short-run aggregate supply curve would shift and the long-run aggregate supply curve would remain fixed if
A) bad weather that affects transportation for two days.
B) there was an increase in immigration.
C) the retirement age increased by two years.
D) tough new environmental laws were passed.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve would shift because bad weather that affects transportation for two days would disrupt the supply chain of goods and services, increasing production costs and reducing output, causing a temporary contraction in the economy. However, the long-run aggregate supply curve would remain fixed in this case because the weather conditions do not affect the potential output of the economy in the long run.

Answer: B 
 An increase in immigration would lead to an increase in the labor force and, therefore, an increase in potential output. This would shift both the short-run and long-run aggregate supply curves to the right, increasing the supply of goods and services, and reducing the price level.

Answer: C 
 In the case of an increase in the retirement age, the supply of labor will increase, leading to an increase in potential output in both the short-run and long-run. This would shift both the short-run and long-run aggregate supply curves to the right, increasing the supply of goods, and services, and reducing the price level.

Answer: D
 If tough new environmental laws were passed, firms would be required to spend more on pollution control, which would increase their production costs, causing a leftward shift in the short-run aggregate supply curve. In the long-run, firms would adjust to the new environmental regulations by investing in clean technology or research, returning production levels to their previous amount, and the long-run aggregate supply curve would remain unchanged.

The Short-Run Aggregate Supply Curve Would Shift and the Long-Run