The long-run aggregate supply curve shifts right at the same time as
A) wages increase.
B) the production possibilities curve shifts outward.
C) the production possibilities curve shifts inward.
D) the inflation rate increases.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the economy's potential output when all prices, including wages, have fully adjusted to changes in the economy. As the production possibilities curve shifts outward, the economy's potential output increases and the long-run aggregate supply curve shifts to the right. The other choices do not necessarily cause a shift in the long-run aggregate supply curve.

The Long-Run Aggregate Supply Curve Shifts Right at the Same