ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase in capital stock
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If 1 million immigrants come to America
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Increase in technology
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Decrease in investment spending
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Detailed explanation-1: -The text notes that rising investment shifts the aggregate demand curve to the right and at the same time shifts the long-run aggregate supply curve to the right by increasing the nation’s stock of physical and human capital.
Detailed explanation-2: -What causes the long run aggregate supply curve to shift? Factors that shift the long-run aggregate supply include labor changes, capital changes, natural resources, and technology changes.
Detailed explanation-3: -Which would NOT cause the LRAS to shift right or left? Changes in inflation do not lead to changes in the LRAS.
Detailed explanation-4: -a sudden fall in investment spending would cause a fall in the interest rate, which would dampen saving and stimulate consumption, quickly returning the economy to full employment.