-In the above figure, starting at E₃, if there is an increase in technology that causes a temporary increase in production capabilities

Question

Quizplus · Accepted Answer

An increase in technology causes a temporary increase in production capabilities, which shifts the SRAS curve to the right. In the long run, the LRAS curve will also shift to the right, but not as much as the SRAS curve. This is because the increase in technology is temporary, and in the long run, other factors, such as the size of the labor force and the capital stock, will determine the level of output.

-In the Above Figure, Starting at E₃, If There Is