The long-run aggregate supply curve shifts left if
A)the capital stock increases.
B)there is a natural disaster.
C)the government removes some environmental regulations that limit production methods.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The long-run aggregate supply (LRAS) curve reflects the productive capacity of an economy based on factors such as technology, capital stock, and labor force. If there is a natural disaster that destroys capital stock or disrupts production, then the LRAS curve shifts leftward, indicating a reduction in the economy's potential output. Choices A and C would both shift the LRAS curve to the right, increasing potential output rather than decreasing it. Therefore, B is the correct answer.

The Long-Run Aggregate Supply Curve Shifts Left If