The figure to the right shows the determination of the economy\'s short run equi

Question

The figure to the right shows the determination of the economy's short run equilibrium price level and aggregate output (income) Draw a single line or curve (either AD or AS) such that a new equilibrium occurs ASo with a lower price level and a higher output (income). NOTE: Shifts in AD require the line drawing tool while the three-point curved line 0 drawing tool is used to shift AS. Properly label your new line or curve Note: Carefully follow the instructions above, and only draw the required object. Which of the following events could have caused this particular change? Po O A. 0 B. ° C. O D. An increase in bad weather and natural disasters. An increase in entrepreneurial-stifling taxes and regulations. A sharp increase in immigration. A reduction in the country's labor force participation rate. AD Aggregate output (income), Y

Explanation / Answer

Shift the supply curve rightward or downward which will increase the quantity or aggregate output and decrease the price.

Ans is C. A sharp increase in immigration will result in increase in worker and will increase the output and thus shift the supply curve rightward.

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