The long-run aggregate supply curve shifts right if
A)the price level rises.
B)the price level falls.
C)the capital stock increases.
D)the capital stock decreases.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the economy's potential output when all inputs (including capital stock) are fully utilized. Therefore, an increase in the capital stock would shift the long-run aggregate supply curve to the right, indicating an increase in potential output at any given price level. The other choices, a rise or fall in the price level or a decrease in the capital stock, would not directly affect the long-run aggregate supply curve.

The Long-Run Aggregate Supply Curve Shifts Right If