Which of the following shifts both the short-run and long-run aggregate supply right?
A)an increase in the actual price level
B)an increase in the expected price level
C)an increase in the capital stock
D)None of the above is correct.

Question

Quizplus · Accepted Answer

An increase in the capital stock shifts both the short-run and long-run aggregate supply right. This is because an increase in capital stock increases the economy's productive capacity and potential output, leading to an increase in aggregate supply. An increase in the actual price level (A) only shifts the short-run aggregate supply left, while an increase in the expected price level (B) only affects the short-run aggregate supply through its impact on production costs.

Which of the Following Shifts Both the Short-Run and Long-Run