Question

If stricter immigration laws are imposed and many foreign workers in the United States are forced to go back to their home countries, Group of answer choices a) we will move down along the long-run aggregate supply curve. b) we will move up along the long-run aggregate supply curve. c) the long-run aggregate supply curve will shift to the left. d) the long-run aggregate supply curve will shift to the right.

Answer 1

Answer:

C) The long-run aggregate supply curve will shift to the right

Explanation:

The long-run aggregate supply curve is vertical because it is thought that demand does not affect supply in the long run.

Supply in the long run is therefore only affected by the factors of production: land, labor, capital, and entrepreneurship (although whether entrepreneurship is a factor of production is a subject of debate among economists).

A curve shifts when an exogenous variable (a variable that is not graphically represented on the coordinated system of the model) changes. In the AS-AD model, labor is an exogenous variable, and a change in labor will therefore shift the supply curve.

If immigrants are forced to leave the US, the labor force will shrink. As output depends on labor, output will be less than before, and this in turn will reduce the aggregate supply in the economy, and make the long-run aggregate supply curve shift to the left.