A change that shifted the long-run aggregate supply curve to the right would also shift the short-run aggregate supply curve to the right.

Question

Quizplus · Accepted Answer

In the long-run, changes in factors such as technology, resources and institutions can cause the long-run aggregate supply curve to shift to the right. This means that the economy can produce more output at the same price level, indicating an increase in potential output. In the short-run, this increase in potential output can also lead to an increase in current output, as firms are able to expand production in response to higher demand. As a result, the short-run aggregate supply curve also shifts to the right following a shift in the long-run aggregate supply curve.

A Change That Shifted the Long-Run Aggregate Supply Curve to the Right