AP Macroeconomics : How to graph long-run aggregate supply curves with aggregate supply and demand graphs

Study concepts, example questions & explanations for AP Macroeconomics

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Example Questions

Example Question #1 : How To Graph Long Run Aggregate Supply Curves With Aggregate Supply And Demand Graphs

The long-run aggregate supply curve is likely to shift to the right when which of the following occurs?

Possible Answers:

An increase in government spending due to government stimulus

A decrease in interest rates due to action by the Federal Reserve

An increase in worker productivity due to technological innovation

A higher than estimated multipler effect

Correct answer:

An increase in worker productivity due to technological innovation

Explanation:

An increase in worker productivity will result in the supply curve shifting, because it results in the economy having more potential output.

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