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Which of the following would lead to a rightward or outward shift in the long-run aggregate supply curve (LRAS)?

An increase in business taxes A lower labor force participation rate An increase in the depreciation of existing capital An increase in the price of a key input, like oil An increase in the rate of savings and capital formation

User Madden
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Final answer:

An increase in the price of a key input, like oil, and an increase in the rate of savings and capital formation would lead to a rightward or outward shift in the long-run aggregate supply curve (LRAS). However, an increase in business taxes, a lower labor force participation rate, and an increase in the depreciation of existing capital would not have this effect.

Step-by-step explanation:

In macroeconomics, an increase in the price of a key input, like oil, would lead to a rightward or outward shift in the long-run aggregate supply curve (LRAS). This is because higher input prices discourage production and reduce the possibilities for earning profits. For example, an increase in oil prices can increase production costs across various industries, leading to a decreased supply of goods and services in the economy.

Additionally, an increase in the rate of savings and capital formation can also lead to a rightward shift in the LRAS curve. This is because higher savings and capital formation can result in increased investments in productive assets, such as machinery and equipment, which can enhance the economy's productive capacity and lead to higher levels of output in the long run.

In contrast, an increase in business taxes, a lower labor force participation rate, and an increase in the depreciation of existing capital would not lead to a rightward or outward shift in the LRAS curve, but rather negatively impact the economy's productive capacity and long-run output.

User Lenaten
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