Figure 8-5 Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve.
-Refer to Figure 8-5. If a change in technology moves the aggregate production function upward,

Question

Figure 8-5  Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve.
-Refer to Figure 8-5. If a change in technology moves the aggregate production function upward,

Quizplus · Accepted Answer

An upward shift in the aggregate production function indicates an increase in productivity due to technological advancement, which leads to an increase in the demand for labor. As a result, the economy will experience an increase in employment and wages. Thus, the correct answer is (C) the demand for labor increases.

Figure 8-5 Panel (A) Shows an Economy's Aggregate Production