Exhibit 10A-5 Macro AD-AS Model

Economic growth is represented in Exhibit 10A-5 by:
A) leftward shift in the long-run aggregate supply curve (LRA
S).
B) inward shift of the production possibilities curve.
C) rightward shift in the long-run aggregate supply curve (LRA
S).
D) movement along the long-run aggregate supply curve (LRA

Question

Exhibit 10A-5 Macro AD-AS Model

​
Economic growth is represented in Exhibit 10A-5 by:
A) ​leftward shift in the long-run aggregate supply curve (LRA
S). 
B) ​ inward shift of the production possibilities curve. 
C) ​rightward shift in the long-run aggregate supply curve (LRA
S). 
D) ​movement along the long-run aggregate supply curve (LRA

Quizplus · Accepted Answer

Economic growth is represented by a rightward shift in the long-run aggregate supply curve (LRAS) as the economy's potential output increases due to factors such as increases in capital or technological advancements. A leftward shift in the LRAS would indicate a decrease in potential output, while an inward shift of the production possibilities curve would indicate a decrease in the economy's ability to produce both goods and services. Movement along the LRAS curve would indicate changes in price levels, not economic growth.