Which of the following would affect both short-run and long-run aggregate supply?
A) a supply shock
B) menu costs
C) money illusion
D) technological change
E) a change in the general price level

Question

Quizplus · Accepted Answer

Technological change affects both short-run and long-run aggregate supply by increasing productivity and lowering costs of production. This leads to an outward shift of both the short-run and long-run aggregate supply curves. The other options do not affect both short-run and long-run aggregate supply. A supply shock only affects short-run aggregate supply, menu costs and money illusion affect the behavior of firms and individuals in the short run, and a change in the general price level may affect short-run aggregate supply but not necessarily long-run aggregate supply.

Which of the Following Would Affect Both Short-Run and Long-Run