An improvement in technology, with other factors unchanged, shifts the long-run aggregate supply curve
Correct answer: B. Rightward because productive capacity increases
- A. Leftward because costs rise
- B. Rightward because productive capacity increases
- C. Leftward because consumption falls
- D. Rightward only if the price level increases
Explanation
Better technology allows an economy to produce more output from its available resources. This increases productive capacity and shifts long-run aggregate supply to the right, independently of a rise in the general price level.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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