When the long-run aggregate supply curve shifts to the right, it represents:
A) economic growth.
B) the economy being pushed beyond normal capacity.
C) an unemployment rate of zero.
D) a lower rate of inflation.

Question

Quizplus · Accepted Answer

When the long-run aggregate supply curve shifts to the right, it represents an increase in potential output due to factors such as technological advancements, increased productivity, and expanded capital stock. This results in economic growth, as the economy is able to produce more goods and services without pushing beyond normal capacity or causing an unemployment rate of zero. Additionally, a shift to the right in the long-run aggregate supply curve can lead to a lower rate of inflation, as increased output reduces upward pressure on prices.

When the Long-Run Aggregate Supply Curve Shifts to the Right