Which of the following shifts both the short-run aggregate supply curve and the long-run aggregate supply curve?
I. changes in the size of the labor force
II. changes in the money wage rate
III. changes in the quantity of capital
A) II only
B) both I and II
C) both I and III
D) I, II and III

Question

Quizplus · Accepted Answer

Changes in the size of the labor force and changes in the quantity of capital affect both the short-run and long-run aggregate supply because they alter the productive capacity of the economy. Changes in the money wage rate typically affect only the short-run aggregate supply curve by changing production costs, not the economy's capacity to produce.

Which of the Following Shifts Both the Short-Run Aggregate Supply