Which of the following will NOT cause a leftward shift in the long-run aggregate supply curve?
A) a net outflow of human capital
B) an increase in the costs of obtaining energy resources
C) a reduction in the amount of capital
D) a reduction in government spending

Question

Quizplus · Accepted Answer

A reduction in government spending will not cause a leftward shift in the long-run aggregate supply curve. The long-run aggregate supply curve is determined by the economy's potential output, which is determined by the amount of capital, labor, and technology available. A reduction in government spending may lead to a reduction in aggregate demand, but it will not affect the economy's potential output in the long run. A net outflow of human capital, an increase in the costs of obtaining energy resources, and a reduction in the amount of capital can all cause a leftward shift in the long-run aggregate supply curve.

Which of the Following Will NOT Cause a Leftward Shift