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Question : The aggregate supply, in the long run, is primarily determined by:

Option 1: Resource price
 

Option 2: Technology
  

Option 3: Government Policies

 

Option 4: Interest rates


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 13th Jan, 2024

Correct Answer: Resource price


Solution : The correct answer is (a) Resource prices.

While technology does play a significant role in influencing long-run aggregate supply, it is the availability and cost of resources, including labor, capital, land, and raw materials, that ultimately shape an economy's production capacity in the long term.

Therefore, in the long run, changes in resource prices, such as fluctuations in wages, energy costs, or the prices of raw materials, have a more significant influence on the aggregate supply curve. Government policies and interest rates can also impact resource availability and costs, but their effects are mediated through their impact on resource markets.

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