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Exhibit: Aggregate Production Function, Labor Market, and LRAS
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS) An upward shift of the aggregate production function would lead to

Question

Use the following to answer questions.
Exhibit: Aggregate Production Function, Labor Market, and LRAS 
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS) An upward shift of the aggregate production function would lead to

Quizplus · Accepted Answer

An upward shift of the aggregate production function represents an increase in productivity, which would lead to an increase in real GDP. As productivity increases, firms can afford to pay higher wages to workers, leading to an increase in the real wage. Therefore, both real GDP and the real wage would increase with an upward shift in the aggregate production function.

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