Which of the following shifts the long-run aggregate supply curve to the left?

• A. A decrease in the available labor force
• B. A reduction in the price level
• C. An increase in capital stock
• D. An increase in technological innovation

Answer: (A)

Verified step by step guidance

1. Step 1: Understand what the Long-Run Aggregate Supply (LRAS) curve represents. The LRAS curve shows the total output an economy can produce when all resources (labor, capital, technology) are fully employed at their natural levels, independent of the price level.
2. Step 2: Recognize that shifts in the LRAS curve are caused by changes in the economy's productive capacity, such as changes in labor force, capital stock, or technology, rather than changes in the price level.
3. Step 3: Analyze each option to determine its effect on productive capacity: a decrease in the available labor force reduces the number of workers, which lowers potential output and shifts LRAS to the left; a reduction in the price level does not affect productive capacity and thus does not shift LRAS; an increase in capital stock or technological innovation increases productive capacity, shifting LRAS to the right.
4. Step 4: Conclude that only a decrease in the available labor force reduces the economy's productive capacity, causing the LRAS curve to shift to the left.
5. Step 5: Summarize that factors reducing resources or productivity shift LRAS left, while factors increasing them shift LRAS right, and price level changes do not shift LRAS.