Question

In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve.

1. The government allows more immigration of working-age adults who find work.
2. This economy's primary source of foreign oil decides to cease exports for political reasons.
3. A government-sponsored training program increases the skill level of the workforce.

Answer 1

1. Will increase the labor force and the productive ability of the economy, which will shift the LRAS curve to the right.
2. Will increase the price of oil and its subproducts (gas, plastic, etc.), which will shift the LRAS curve to the left.
3. Will increase the productivity of the labor force, which will shift the LRAS curve to the right.