In which of the following situations would the long-run aggregate supply curve shift right?
A)if the government were to increase the minimum-wage law
B)if the government were to make unemployment benefits more generous
C)if the government were to raise taxes on investment spending
D)if immigration were to increase

Question

Quizplus · Accepted Answer

An increase in immigration would result in an increase in the labor force, which would shift the long-run aggregate supply curve to the right. A) is incorrect because an increase in the minimum wage would increase the cost of production and shift the aggregate supply curve to the left. B) is incorrect because more generous unemployment benefits would decrease the incentive to work, resulting in a decrease in the labor force and a leftward shift in the aggregate supply curve. C) is incorrect because a tax increase on investment spending would decrease investment and decrease the economy's long-run growth potential, leading to a leftward shift in the long-run aggregate supply curve.

In Which of the Following Situations Would the Long-Run Aggregate