As the labor force becomes more productive over time, how does that affect the l

Question

As the labor force becomes more productive over time, how does that affect the long-run aggregate supply curve? O A. The LRAS curve shifts to the left because there is a decrease in structural unemployment and thus a decline in the natural rate of B. The LRAS curve shifts to the right because the existing labor force, along with a given amount of capital and other resources, can produce ° C The LRAS curve does not change because long run aggregate supply is determined only by the total amount of capital and labor supplied in O D. The LRAS curve becomes steeper because a persistent output gap may occur. unemployment more output the economy

Explanation / Answer

The correct answer is: b)

Reason: since the output increases due to increase in labor productivity, the LRAS curve shift to the right implying an increase in aggregate supply.

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