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1
1. Explain whether each of the following events will increase, decrease, or have no effect on long-run aggregate supply. a. Country invites more expats. b. Government raises the minimum wage. c. Intel invents a new and more powerful computer chip. d. A new virus results in closedown of many companies
Expert Solution
a. When country invites more expats, it will increase long-run aggregate supply as there will be an increase in labor force which will inturn raise potential GDP.
b. Government raising minimum wage will have no effect on long-run aggregate supply as there is no change in labor force, capital and technology.
c. Intel invents a new and more powerful computer chip will increase the long-run aggregate supply as there is technological advancement.
d. A new virus results in closedown of many companies will decrease long-run aggregate supply as capital and labor force will be not in use.
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