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An overseas war requires a large number of workers to leave their ordinary production jobs to fight. What does this labor shock do to the aggregate supply curve?
AShifts it to the left, since fewer workers remain to produce goods
BShifts it to the right, since military spending boosts output
CHas no measurable effect on aggregate supply
DShifts the aggregate demand curve rather than aggregate supply
Answer & Solution
Correct answer: A. Shifts it to the left, since fewer workers remain to produce goods
1. Labor is an input to production, so a shock that removes workers from the labor force affects supply.
2. With fewer workers available, less output can be produced and sold at any given price level.
3. A curve showing less output supplied at every price level has shifted to the left.
4. This is explicitly identified as a shock to aggregate supply, not aggregate demand, so option D names the wrong curve.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 10 "The Aggregate Demand/Aggregate Supply Model", section 10.3 | Shifts in Aggregate Supply_
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