Question

which of the following will increase both the short - run and long - run aggregate supply curves?
○ a. the wage rate decreases throughout the economy temporarily.
○ b. younger workers in the labor force receive better and more training than their predecessors.
○ c. the supply of key raw materials such as petroleum and bauxite are reduced.
○ d. there are fewer firms involved in perfectly competitive and monopolistically competitive market structures as the economy features more oligopolies than before.

Explanation:

• Option A: A temporary decrease in wage rate only affects the short - run aggregate supply (SRAS) as it is a short - term cost factor. In the long - run (LRAS), wages are fully flexible and adjust, so it does not affect LRAS.
• Option B: Better training for younger workers increases the quality of the labor force. This is a factor that affects the productive capacity of the economy in both the short - run (as firms can produce more with more skilled labor) and the long - run (as the overall potential output of the economy, which is what LRAS represents, increases due to a more productive labor force).
• Option C: Reduced supply of key raw materials decreases both SRAS (in the short - run, firms face higher input costs) and LRAS (as the economy's potential to produce goods and services using these raw materials is diminished). But this is a negative impact, not an increase.
• Option D: A change in market structure (fewer firms in competitive markets and more oligopolies) is more likely to affect factors like market power and efficiency in a way that may not directly increase productive capacity. Oligopolies may have less incentive to produce at the level of a more competitive market structure, so it is not likely to increase aggregate supply.

Answer:

B. Younger workers in the labor force receive better and more training than their predecessors