Suppose that the position of a nation\'s long-run aggregate supply curve has not

Question

Suppose that the position of a nation's long-run aggregate supply curve has not changed, but its long-run equilibrium price level has increased. Which of the following factors might account for this event?
a.A rise in the value of the domestic currency relative to other world currencies.
b.An increase in the quantity of money in circulation.
c.An increase in the labor force participation rate
d.A decrease in taxes
e.A rise in real incomes of countries that are key trading partners of this nation.
f.Increased long-run economic growth.

Explanation / Answer

Equilibrium price occurs when demand matches supply. Here,long-run supply curve is unchanged and equilibrium price has increased. This means, there is upward shift in long-run demand curve This can happen if there is long-run changes in demand which may be an effect of long-run economic growth. Hence, in my opinion, Option (f), " increased long-run economic growth. " is the ANSWER.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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