If more workers leave Australia to seek out better opportunities in another country than new workers arriving into Australia, then this will: a. Shift the short-run aggregate supply curve of Australia to the left. b. Shift the short-run aggregate supply curve of Australia to the right. c. Move the Australian economy down along a stationary short-run aggregate supply curve. d. Move the Australian economy up along a stationary short-run aggregate supply curve.
Question
If more workers leave Australia to seek out better opportunities in another country than new workers arriving into Australia, then this will:
a. Shift the short-run aggregate supply curve of Australia to the left.
b. Shift the short-run aggregate supply curve of Australia to the right.
c. Move the Australian economy down along a stationary short-run aggregate supply curve.
d. Move the Australian economy up along a stationary short-run aggregate supply curve.
Solution
The correct answer is a. Shift the short-run aggregate supply curve of Australia to the left.
Here's why:
The short-run aggregate supply (SRAS) curve represents the total quantity of goods and services that firms are willing and able to produce, given the price level and the current state of technology.
When more workers leave Australia than arrive, the labor force in Australia decreases. This means there are fewer workers available to produce goods and services, which decreases the potential output of the economy.
As a result, the SRAS curve shifts to the left, indicating a decrease in the total quantity of goods and services firms are able to produce at the same price level.
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