According to Figure 17.7,a shift in the long-run aggregate supply from LRAS₁ to LRAS₂ would most likely result from A)An increase in government spending. B)An increase in labor skills. C)A decrease in transfer payments. D)An increase in the money supply.

Question

Quizplus · Accepted Answer

A shift in the long-run aggregate supply curve indicates a change in potential output. An increase in labor skills would increase the productivity of workers, leading to a rightward shift in the LRAS curve from LRAS₁ to LRAS₂. None of the other options would directly affect potential output in the long run.