An expansion of long-run aggregate supply (LRAS) generally indicates that the economy can produce more goods and services at full employment, typically due to factors such as improvements in technology, increases in resource availability, or advancements in skills and productivity.
With this in mind, assuming product and resource prices are downwardly flexible, an expansion of LRAS would lead to:
- Low unemployment: This is correct, as the economy can support more jobs when production capacity expands.
- Economic expansion: This is also correct, as an increase in LRAS is indicative of the economy growing.
- Inflation: This would generally not be the case, as an increase in supply typically helps to stabilize or decrease prices.
- A lower price level: This can occur, as an increase in LRAS may lead to lower prices if aggregate demand does not increase proportionately.
Given these interpretations, the best answer would be Low unemployment and Economic expansion. However, if you are looking for a more singular answer in the context of a typical question like this, Low unemployment is a strong indication of the outcome in the long run.
If you can choose only one option, I would suggest Low unemployment.