Question

The slope and position of the long-run aggregate supply curve

Answer 1

Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply.

1). The level of technological knowledge

2). The price level

3). The size of the labor force

4). The quantity of physical capital

Explanation:

The Federal Reserve System is United States of America of central banking system. The Fed doubles the quantity of money growth rate in the economy. In the long run, the increase in money growth will change the price level  and/or a change in supply of goods and services

Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment to rise, which will:

1). Shift the long-run aggregate supply curve to the right

2). Shift the long-run aggregate supply curve to the left

3). Not affect the long-run aggregate supply curve

The minimum wage is the lowest monthly or hourly remuneration that employers are legally allowed to pay their workers. The minimum wage acts like a tax on businesses. The aggregate supply curve shifts to the left, as the price of key inputs rises. Therefore it makes a combination of lower output, higher unemployment, and higher inflation.

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Answer 2

Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply.

__ The price level
__ The inflation rate

Suppose the economy produces real GDP of $50 billion when unemployment is at its natural rate.
(graph goes here)
Suppose the government passes a law that reduces unemployment benefits in a way that causes unemployed workers to seek out new jobs more quickly. The policy will cause the natural rate of unemployment to (rise / fall) which will:
__ Shift the long-run aggregate supply curve to the left


Direction of LRAS Curve Shift:
Many workers leave to pursue more lucrative careers in foreign economies. (Left )
For environmental and safety reasons, the government requires that the country's nuclear (Left)
power plants be permanently shut down. (Left )
An investment tax credit increases the rate at which firms acquire machinery and equipment. (Right)