Economic growth can be represented by

Question

Quizplus · Accepted Answer

Economic growth is represented by an increase in an economy's potential output, which is determined by the factors of production and technology available. An increase in potential output is shown by a rightward shift of the long-run aggregate supply (LRAS) curve, as it represents the maximum sustainable level of output an economy can produce in the long run. Option A refers to an increase in equilibrium output level, but this can occur due to factors other than economic growth, such as a short-term increase in demand. Option B refers to a rightward shift of the short-run aggregate supply curve, which can lead to higher output in the short run but does not represent sustained economic growth. Option C refers to a rightward shift of the long-run aggregate demand curve, which can lead to increased output in the long run but only if accompanied by an increase in potential output (represented by a rightward shift of the LRAS curve).

Economic Growth Can Be Represented by