A rightward shift of the long-run aggregate supply curve is caused by
A) an increase in the minimum wage.
B) an increase in the average duration of unemployment.
C) improvements in technology.
D) an increase in the GDP deflator.

Question

Quizplus · Accepted Answer

Improvements in technology increase the productivity of resources, allowing firms to produce more output with the same amount of inputs. This leads to a rightward shift of the long-run aggregate supply curve, as the economy is now capable of producing more output in the long run at every price level. Increases in the minimum wage (A) and average duration of unemployment (B) would lead to a leftward shift of both the short-run and long-run aggregate supply curves, as these factors increase production costs for firms. An increase in the GDP deflator (D) would only indicate an increase in the overall price level and would not cause a shift in the long-run aggregate supply curve.

A Rightward Shift of the Long-Run Aggregate Supply Curve Is