The long-run aggregate supply will increase when
A) labor supply decreases.
B) international trade barriers are removed.
C) the price level increases.
D) tax rates increase.

Question

Quizplus · Accepted Answer

When international trade barriers are removed, resources and technology can be imported more easily. This allows for an increase in productive capacity, which leads to an increase in the long-run aggregate supply. The other choices have a negative impact on the long-run aggregate supply.

The Long-Run Aggregate Supply Will Increase When