What happens if technological change occurs in the economy?
A)The long-run aggregate supply curve will shift to the left.
B)The long-run aggregate supply curve will shift to the right.
C)The economy will move up along the long-run aggregate supply curve.
D)The economy will move down along the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

Technological change leads to an increase in productivity, which in turn increases the potential output of the economy. This causes the long-run aggregate supply curve to shift to the right. Therefore, the correct answer is B, the long-run aggregate supply curve will shift to the right.

What Happens If Technological Change Occurs in the Economy