Rising productivity will increase economic growth and raise the average standard of living, shifting the _____ curve to the _____.

Question

Quizplus · Accepted Answer

Rising productivity is a factor that can shift the long-run aggregate supply (LRAS) curve to the right. An increase in productivity allows firms to produce more output with the same amount of resources. This leads to an increase in potential output, which causes the LRAS curve to shift to the right. As a result, the economy can produce more goods and services at lower prices, which leads to an increase in economic growth and an increase in the average standard of living.

Rising Productivity Will Increase Economic Growth and Raise the Average