714PART TWELVESHORT-RUN ECONOMIC FLUCTUATIONSthe minimum wage substantially, the natural rate of unemployment would rise,and the economy would produce a smaller quantity of goods and services. As aresult, the long-run aggregate-supply curve would shift to the left. Conversely, ifa reform of the unemployment insurance system were to encourage unemployedworkers to search harder for new jobs, the natural rate of unemployment wouldfall, and the long-run aggregate-supply curve would shift to the right.Shifts Arising from CapitalAn increase in the economy’s capital stockincreases productivity and, thereby, the quantity of goods and services supplied.As a result, the long-run aggregate-supply curve shifts to the right. Conversely, adecrease in the economy’s capital stock decreases productivity and the quantity ofgoods and services supplied, shifting the long-run aggregate-supply curve to theleft.
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