Chapter 7R, Problem 13MCQ

To determine

To find:

Indication of rightward shift of LRAS curve

Answer to Problem 13MCQ

Option D is correct.

Explanation of Solution

Option D is correct.

An increase in the aggregate price level indicates the rightward shift in LRAS curve.

Option A is incorrect as long run economic growth is shown by LRAS but does not shift the curve.

Option B is incorrect as increase in unemployment would shift LRAS curve leftward.

Option C is incorrect as decrease in Real GDP would shift LRAS curve backward.

Option E is incorrect as economic recovery would shift not shift LRAS curve.

Economics Concept Introduction

Production possibility curve is the graphical representation of the combination of all goods and services that can be produced by using the current level of inputs.