Question

If, due to a recession, foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended, this willA. shift the short-run aggregate supply curve of the home country to the left. B. move the home country's economy down along a stationary short-run aggregate supply curve. C. move the home country's economy up along a stationary short-run aggregate supply curve. D. shift the short-run aggregate supply curve of the home country to the right.

Answer 1

The correct answer is option D.

Step-by-step explanation:

Due to the recession in the US, if the workers from foreign countries go back to their countries until the recession has ended, this will increase the availability of labor for the home country.

As the supply of labor increases, the nominal wages will decline. It will become cheaper for firms to hire more workers. As firms hire more and more workers, they will be able to produce more. So the short-run aggregate supply curve of the home country will move to the right.