Which one of the following newspaper quotations describes a movement along an LAS curve?
A)"The increase in consumer spending is expected to lead to inflation, without any increase in real GDP."
B)"The decrease in consumer spending may lead to a recession."
C)"The recent tornadoes destroyed many factories in Calgary and Edmonton."
D)"Growth has been unusually high the last few years due to more women entering the labour force."
E)"Recent higher wage settlements are expected to cause higher inflation this year."

Question

Quizplus · Accepted Answer

A movement along an LAS (long-run aggregate supply) curve is caused by a change in price level, while factors that affect real GDP will shift the curve itself. In option A, an increase in consumer spending is predicted to cause inflation (a movement along the LAS curve) without any change in real GDP.

Which One of the Following Newspaper Quotations Describes a Movement