If labor productivity rises at the same time that there is a beneficial supply shock,what is the effect on short-run aggregate supply (SRAS)?
A) SRAS rises.
B) SRAS falls.
C) SRAS remains constant.
D) SRAS may rise,fall,or remain constant.

Question

Quizplus · Accepted Answer

Labor productivity refers to the amount of output produced per unit of labor input. If labor productivity rises, it means that more output can be produced with the same amount of labor input. This leads to an increase in potential output and shifts the long-run aggregate supply (LRAS) curve to the right. Additionally, if there is a beneficial supply shock, it means that production costs have decreased and firms can produce more output at any given price level. This also shifts the SRAS curve to the right. Therefore, when labor productivity rises at the same time as a beneficial supply shock, SRAS will rise.

If Labor Productivity Rises at the Same Time That There