If technological change shifts the long-run aggregate-supply curve to the right, it will also do which of the following?
A) It shifts both the short-run and long-run Phillips curves to the right.
B) It shifts both the short-run and long-run Phillips curves to the left.
C) It will shift the short-run aggregate-supply curve to the right and the long-run Phillips curve to the left.
D) It will shift the short-run aggregate-supply curve to the right and leave the long-run Phillips curve unaffected.

Question

Quizplus · Accepted Answer

Technological change shifts the long-run aggregate-supply curve to the right, indicating an increase in potential GDP. In the short run, the economy experiences a temporary increase in output and a decrease in unemployment, resulting in a movement along the existing short-run aggregate-supply curve. However, in the long run, wages and prices adjust to the new level of potential GDP, and the economy returns to full employment, represented by the intersection of the short-run and long-run aggregate-supply curves. Therefore, technological change only affects the long-run Phillips curve, leaving the short-run Phillips curve unaffected.

If Technological Change Shifts the Long-Run Aggregate-Supply Curve to the Right