Economic growth can be modeled as
I. an outward shift of the economy's production possibilities curve.
II. a rightward shift of the economy's long-run aggregate supply curve.
III. a rightward shift of the labor demand and the labor supply curves.
IV. a downward shift of the economy's aggregate production function.

Question

Quizplus · Accepted Answer

Economic growth is typically modeled as an outward shift of the economy's production possibilities curve, as more goods and services can be produced with the same amount of resources. This leads to a rightward shift of the economy's long-run aggregate supply curve, as firms can produce more output in the long run. However, economic growth does not necessarily lead to a shift in the labor demand and labor supply curves, as these are typically determined by factors such as the wage rate and population demographics. Economic growth also does not typically lead to a downward shift of the economy's aggregate production function, which reflects the relationship between inputs and output.

Economic Growth Can Be Modeled as