Federal Reserve policy makers argue about whether productivity is increasing faster than it has in the past. If productivity is growing faster than anticipated, they would expect the:
A)aggregate demand curve to be shifting to the right.
B)aggregate demand curve to be shifting to the left.
C)short-run aggregate supply curve to be shifting down (to the right).
D)short-run aggregate supply curve to be shifting up (to the left).

Question

Quizplus · Accepted Answer

An increase in productivity means that the economy can produce more goods and services with the same amount of resources, which effectively lowers the cost of production. This scenario is represented by the short-run aggregate supply curve shifting down (to the right), indicating an increase in supply without an increase in the price level.

Federal Reserve Policy Makers Argue About Whether Productivity Is Increasing