Which of the following would shift the long-run aggregate supply curve right?
A)both an increase in the capital stock and an increase in the price level
B)an increase in the capital stock,but not an increase in the price level
C)an increase in the money supply,but not an increase in the capital stock
D)neither an increase in the money supply nor an increase in the capital stock

Question

Quizplus · Accepted Answer

An increase in the capital stock would shift the long-run aggregate supply curve right, as it would increase the economy's potential output. An increase in the price level would, however, cause a movement along the long-run aggregate supply curve, rather than a shift. An increase in the money supply would affect only the short-run aggregate supply curve, as it would lead to higher output and prices in the short run, but would not affect the economy's potential output in the long run. Therefore, option B is the only one that would shift the long-run aggregate supply curve right, as it involves an increase in the capital stock without a change in the price level.

Which of the Following Would Shift the Long-Run Aggregate Supply