Which of the following does not affect long-run aggregate supply? a

Economics Dec 14, 2020

Which of the following does not affect long-run aggregate supply?

a. A change in labor force participation,

b. An outward movement of aggregate demand,

c. A negative trend in labor productivity,

d. An increase in the marginal tax rates on wages,

e. A new provision of government benefits that affect household incentives.

Expert Solution

The correct answer is b. An outward movement of aggregate demand.

A shift in the aggregate demand may impact the price level and output level of the economy, but it does not impact aggregate supply. The other factors can all affect long-run aggregate supply.

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