Decreases in the NAIRU represent a:
A)leftward shift in the aggregate demand curve.
B)leftward shift of the long-run aggregate supply curve.
C)rightward shift of the long-run aggregate supply curve.
D)rightward shift in the aggregate demand curve.

Question

Quizplus · Accepted Answer

Decreases in the Non-Accelerating Inflation Rate of Unemployment (NAIRU) indicate that the economy can sustain lower levels of unemployment without causing inflation to increase. This is typically associated with improvements in productivity or increases in the labor force, both of which can shift the long-run aggregate supply curve to the right, indicating an increase in the potential output of the economy.

Decreases in the NAIRU Represent A