An increase in the long-run aggregate supply has no effect on macroeconomic equilibrium.

Question

Quizplus · Accepted Answer

An increase in the long-run aggregate supply shifts the aggregate supply curve to the right, leading to lower prices and higher output. This can cause a movement along the aggregate demand curve, resulting in a lower equilibrium price level and higher equilibrium output. Therefore, an increase in long-run aggregate supply does affect macroeconomic equilibrium.

An Increase in the Long-Run Aggregate Supply Has No Effect