If the aggregate supply curve shifts outward, then unemployment

Question

Quizplus · Accepted Answer

An outward shift of the aggregate supply curve means that the economy is able to produce more goods and services at every price level. This leads to a decrease in costs for firms, which allows them to increase output without increasing prices. As a result, there is no upward pressure on prices and inflation is expected to decrease. At the same time, the increased production creates more job opportunities which will reduce unemployment. Therefore, both unemployment and inflation will decrease.

If the Aggregate Supply Curve Shifts Outward, Then Unemployment