Which of the following changes in an economy is most likely to cause a permanent leftward shift in its long-run aggregate supply (LRAS) curve?
A sustained rise in the rate of long-term illness that permanently reduces the size of the active labor force.
A temporary depreciation in the exchange rate of the domestic currency, raising the price of imported raw materials.
A fall in the rate of interest, which stimulates business investment in new machinery.
A cyclical reduction in consumer confidence that causes a significant rise in household saving.
31 exam-style questions on Edexcel A A Level Economics 2.3 Aggregate supply (AS), covering 2.3.1 The characteristics of AS, 2.3.2 Short-run AS, and 2.3.3 Long-run AS. Each one has a worked solution and a mark scheme showing where the marks go.