A persistent positive aggregate supply shock, say a productivity shock, will

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A persistent positive aggregate supply shock, such as a productivity shock, increases the economy's capacity to produce goods and services. This leads to higher output as the economy can produce more efficiently. At the same time, the increased supply of goods and services tends to lower prices, or at least reduce the pressure on prices to rise, leading to lower inflation.

A Persistent Positive Aggregate Supply Shock, Say a Productivity Shock