Which of the following will result in an upward shift of the aggregate production function?
A) An increase in the rate of taxation in the economy
B) An increase in productivity due to the discovery of an advanced technology
C) An increase in the aggregate price level in the economy
D) An increase in the number of educated people in the economy

Question

Quizplus · Accepted Answer

An increase in productivity due to the discovery of an advanced technology will result in an upward shift of the aggregate production function as it increases the level of output that can be produced with the same amount of inputs. The other options are not likely to result in an upward shift of the aggregate production function. An increase in the rate of taxation (A) would reduce the incentive to work and invest, leading to a decrease in aggregate production. An increase in the aggregate price level (C) would result in a movement along the existing production function, not a shift of the function. An increase in the number of educated people (D) may increase productivity, but it would not necessarily shift the entire aggregate production function upward.

Which of the Following Will Result in an Upward Shift