AP Macroeconomics Question 9: Answer and Explanation

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Question: 9

4. Long-run aggregate supply is most likely to increase as the result of

  • A. an increase in the real interest rate
  • B. increased investment in capital
  • C. an increase in aggregate demand
  • D. an increase in the unemployment rate
  • E. an increase in the exchange rate

Correct Answer: B


B Long-run aggregate supply increases when industry can produce more. This can happen if the country invests in equipment (i.e., capital). Therefore the answer is (B).