Which of the following would not cause a shift in the long-run aggregate-supply curve?

Question

a. an increase in the available labor
b. an increase in the available capital
c. an increase in the available technology
d. an increase in price expectations
e. All of the above shift the long-run aggregate-supply curve.

Answer 1

The correct answer is d. an increase in price expectations.

The long-run aggregate supply (LRAS) curve represents the economy's potential output when resources are fully employed and all factors of production are used efficiently. Changes that can shift the LRAS curve include:

• An increase in the available labor (a) – This would shift the LRAS to the right, indicating an increase in potential output.
• An increase in the available capital (b) – More capital allows for greater production capacity, shifting the LRAS curve to the right.
• An increase in the available technology (c) – Improvements in technology can enhance productivity and efficiency, leading to a rightward shift in the LRAS.

On the other hand, an increase in price expectations (d) is primarily associated with movements along the aggregate supply curves in the short run and does not affect the long-run aggregate supply. Thus, it would not cause a shift in the LRAS curve.

Therefore, the answer is d. an increase in price expectations.