The slope and position of the long-run aggregate supply curve
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply.
__ The quantity of physical capital
__ The price level
__ The inflation rate
__ The size of the labor force
Suppose the economy produces real GDP of $50 billion when unemployment is at its natural rate.
(graph goes here)
Suppose the government passes a law that reduces unemployment benefits in a way that causes unemployed workers to seek out new jobs more quickly. The policy will cause the natural rate of unemployment to (rise / fall) which will:
__ Shift the long-run aggregate supply curve to the left
__ Shift the long-run aggregate supply curve to the right
__ Not affect the long-run aggregate supply curve
In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve.
Direction of LRAS Curve Shift:
Many workers leave to pursue more lucrative careers in foreign economies. (Left / No Shift/ Right)
For environmental and safety reasons, the government requires that the country's nuclear (Left / No Shift/ Right)
power plants be permanently shut down. (Left / No Shift/ Right)
An investment tax credit increases the rate at which firms acquire machinery and equipment. (Left / No Shift/ Right)