According to Figure 17.7,improved management would most likely result in A)A shift in the AD curve from AD1 to AD2. B)A shift in the AD curve from AD2 to AD1. C)A shift in the long-run aggregate supply from LRAS₂ to LRAS_1. D)A shift in the long-run aggregate supply from LRAS₁ to LRAS_2.

Question

Quizplus · Accepted Answer

Improved management would result in an increase in productivity, which would shift the LRAS curve to the right from LRAS₁ to LRAS₂. This is because firms would be able to produce more output with the same amount of resources, leading to a higher potential output level. Therefore, choice D is the correct answer.