The long-run aggregate supply curve will shift to the left when
A) population decreases.
B) the price level increases.
C) technology improves.
D) new sources of natural resources are discovered.

Question

Quizplus · Accepted Answer

A decrease in population leads to a decrease in the quantity of labor available in the economy, causing a leftward shift in the long-run aggregate supply curve. The other options either have no effect on the long-run aggregate supply curve (technology improves) or shift it to the right (new sources of natural resources are discovered) because they increase the potential output of the economy. An increase in the price level (option B) would cause movement along the long-run aggregate supply curve, not a shift.

The Long-Run Aggregate Supply Curve Will Shift to the Left