Question

Identify how the Long Run Aggregate Supply curve can be increased and give 2 examples of policies/actions/efforts, being done or being proposed, that you feel meet one of these criteria and are contributing to the LRAS growth in the U.S. economy.

Answer 1

Long run aggregate supply curve can be increased by improving quality of resources like better education and training or by increase in the quantity of scarce resources such as inward migration.

Example: higher government spending on education, transport and communication this will increase productivity and efficiency in the market.

Example: by lowering corporate tax or lower interest rate will encourage higher level of business investment and expand the size of capital stock and reduce the average age of capital leads to more productivity.

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