Other things equal, an improvement in productivity will:
A)tend to increase the equilibrium price level.
B)shift the aggregate supply curve to the left.
C)shift the aggregate supply curve to the right.
D)shift the aggregate demand curve to the left.

Question

Quizplus · Accepted Answer

An improvement in productivity means that firms can produce more output with the same inputs or the same output with fewer inputs. This leads to a decrease in production costs and an increase in the supply of goods and services. Therefore, the aggregate supply curve shifts to the right. This results in a lower price level and higher output.

Other Things Equal, an Improvement in Productivity Will