According to Figure 17.7,a shift in the long-run aggregate supply from LRAS₁ to LRAS₂ would most likely result from A)An increase in government spending. B)An increase in labor skills. C)A decrease in transfer payments. D)An increase in the money supply.

Question

Quizplus · Accepted Answer

A shift in the long-run aggregate supply curve represents changes in the economy's productive capacity. An increase in labor skills would result in more efficient production, leading to an outward shift in the LRAS curve. The other choices (increased government spending, decreased transfer payments, and increased money supply) would impact aggregate demand, not aggregate supply.