Sticky Wages Distinguish SRAS from LRAS Shifts

Steps:

• Recall SRAS shifts due to temporary changes in input costs, like wages, which are sticky in the short run.
• Recall LRAS shifts only from permanent changes in economy's productive capacity, such as technology or labor supply.
• Evaluate each option: Does it alter short-run costs without affecting long-run potential output?
• Select the option that fits SRAS shift criteria but leaves LRAS unchanged.

Why B is correct:

• A change in money wage rate raises or lowers production costs, shifting SRAS left or right, but in the long run, wages adjust flexibly to restore full employment, leaving LRAS vertical and unchanged (per sticky wage theory).

Why the others are wrong:

• A: Advances in technology boost productivity permanently, shifting both SRAS and LRAS rightward.
• C: Emigration reduces labor supply, decreasing potential output and shifting LRAS leftward (also affects SRAS).
• D: Gross investment exceeding depreciation grows capital stock, increasing long-run capacity and shifting LRAS rightward.

Final answer: B