If resources become more productive:
A)neither the short-run aggregate curve nor the long-run supply curve shifts
B)the short-run aggregate-supply curve is not affected but the long-run aggregate curve shifts
C)the aggregate-demand curve shifts
D)both the short-run and the long-run aggregate-supply curves shift

Question

Quizplus · Accepted Answer

If resources become more productive, both the short-run and the long-run aggregate-supply curves will shift to the right. This is because an increase in productivity means that firms can produce more output with the same amount of resources, which leads to lower costs of production and an increase in potential GDP. This shift in the aggregate supply curves will cause prices to decrease and output to increase in both the short-run and the long-run.

If Resources Become More Productive