True or False: Whenever the economy enters a recession, its long-run aggregate-s

Question

True or False: Whenever the economy enters a recession, its long-run aggregate-supply curve shifts to the left. O True O False Indicate whether each of the following events will increase, decrease, or have no effect on long-run aggregate supply (LRAS). Effect on LRAS Event Many workers leave the United States for employment opportunities in Asia. Congress limits the work week to 40 hours. The United States closes itself to international trade. A severe hurricane damages factories along the East Coast. increases/decreases/no effect

Explanation / Answer

(1) False

During recession, aggregate demand shifts toward left.

(2)

(i) Many workers leave United States - LRAS decreases

[Since it lowers labor supply]

(ii) Congress limits work week - LRAS decreases

[Since this Act reduces the total number of labor hours available for work fall]

(iii) United States closes to international trade - No effect

[No-trade policy will impact aggregate demand only]

(iv) Severe hurricane damages factories - LRAS decreases

[Since capital stock decreases]

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.