An increase in productivity
A)would cause the short-run aggregate supply curve to shift to the left.
B)would cause the long-run aggregate supply curve to shift to the left.
C)would cause the short-run aggregate supply curve to shift to the right.
D)would cause the long-run aggregate supply curve to shift to the right.

Question

Quizplus · Accepted Answer

An increase in productivity would allow firms to produce more output with the same amount of input. This would lower the cost of production and shift the long-run aggregate supply curve to the right. In the short-run, there may be some adjustment issues for firms, but in the long-run they would be able to adjust their production levels and the short-run aggregate supply curve would also shift to the right.

An Increase in Productivity