Economic growth is represented on the aggregate supply model by a
A) shift in the long-run aggregate supply curve to the left.
B) shift in the long-run aggregate supply curve to the right.
C) shift in the short-run aggregate supply curve to the left.
D) shift in the short-run aggregate supply curve to the right.

Question

Quizplus · Accepted Answer

Economic growth is represented as an increase in the economy's productive capacity over the long term. This is represented by a shift in the long-run aggregate supply (LRAS) curve to the right, as more goods and services can be produced at every price level. As LRAS determines the potential output of an economy, an increase in LRAS represents an increase in potential output and economic growth.

Economic Growth Is Represented on the Aggregate Supply Model by a