An Increase in Labor Supply Would Cause the IS Curve

question 71

Multiple Choice

An increase in labor supply would cause the IS curve to

• A)shift up and to the right.
• B)shift down and to the left.
• C)remain unchanged.
• D)shift up and to the right only if people face borrowing constraints.

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Definitions:

Aggregate Demand

The total demand for all goods and services within an economy at a given overall price level and in a given time period.

Demand Function

A mathematical expression that describes the relationship between the quantity of a good demanded and its price, along with other factors such as income and prices of related goods.

Market Demand Curve

Represents the total quantity of a good that all consumers in a market are willing and able to purchase at each possible price over a period of time.

Individual Demand Curves

Graphical representations showing the relationship between the quantity of a good that a single consumer would buy at each price.