Economic growth results when there are increases in
A)aggregate demand.
B)the real wage rate.
C)long-run aggregate supply.
D)the inflationary gap.
E)short-run aggregate supply resulting from falling money wage rates and falling factor prices.

Question

Quizplus · Accepted Answer

Economic growth results from increases in long-run aggregate supply, which is the productive capacity of an economy. This can come from improvements in technology, increases in capital stock, and increases in the size and quality of the labor force. Increases in aggregate demand, real wage rate, inflationary gap, or short-run supply resulting from falling factor prices may lead to short-run economic growth, but not sustained long-term growth.

Economic Growth Results When There Are Increases in