Question

Suppose a nation opened its borders to the free flow of workers from other nations. how would this event likely affect the long-run aggregate supply (lras) curve and the production possibilities curve of the nation?
a) the (lras) curve would shift to the right, and the production possibilities curve would not shift.
b) both curves would shift to the right.
c) neither curve would shift.
d) both curves would shift to the left.
e) the (lras) curve would shift to the left, and the production possibilities curve would shift to the right.

Answer 1

Answer:

B) both curves would shift to the right.

Explanation:

The long-run aggregate supply (LRAS) curve will shift to the right because the production costs will decrease, increasing total production output and lowering prices.

The production possibilities frontier (PPF) will also shift to the right because more production output increases total supply, and that increases the production possibilities of the country.