Ceteris paribus,an improvement in productivity will shift the aggregate:

Question

Quizplus · Accepted Answer

An improvement in productivity would increase the efficiency of production, resulting in an increase in the aggregate supply curve. If potential output remains constant, the curve will shift to the right without a corresponding increase in supply. However, if potential output also increases due to productivity gains, the supply curve will shift to the right and potential output will increase. Therefore, the correct answer is C.

Ceteris Paribus,an Improvement in Productivity Will Shift the Aggregate