posted by Jenny on .
What happens if anything, to the unemployment rate when the long run aggregate supply curve increases?
I think it shifts to the right??
I need some help on this one.
Employment is positively related to total output (GNP). (So, unemployment is therefore negatively related).
So, start with a graph of aggregate supply and demand, GNP on the x axis, prices on the y. Find equilibrium. Now increase supply -- shift the supply curve to the right.
What happens to GNP?