Suppose that the position of a nation\'s long-run aggregate supplycurve has not

Question

Suppose that the position of a nation's long-run aggregate supplycurve has not changed, but its long-run equilibrium price level hasincreased. Which of the following factors might account for thisevent?
a. a rise in the value of domestic currency relative to other worldcountries
b. an increase in the quantity of money in circulation
c. an increase in the labor force participation rate
d. a decrease in taxes
e. a rise in real incomes of countries that are key tradingpartners of this nation
f. increased long-run economic growth

Explanation / Answer

I would say that the answer is: a Reasons: Say i produce 100 jars of jam a month and because of the long-runaggregated supply curve didn't change so i only continue to producea 100 jars a month. But then the long-run equilibrium price levelincreased. that would mean instead of charging $5 a jar i would becharging $8 a jar. now i would be making $800 instead of $500 amonth still only with the same amount of jars. If there is anincrease in the quantity of money circulating i will only still beselling the same amount of jars. the increase of labor depends onthe change of aggregated supply cure and since it was given that itdidn't change so this option gets eliminated. The rise ofincome of countries is a little of stretch in this case. theincreased long-run growth is also affected by the aggregated supplycurve which again is unchanged. I hope this helps and i will let you know if there is a change:)

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