If an advance in technology shifts the long-run aggregate supply curve out:

Question

Quizplus · Accepted Answer

As the long-run aggregate supply curve shifts outwards, it signifies an increase in the economy's potential output. With a greater capacity to produce goods and services, the overall supply of goods increases, leading to lower prices. Simultaneously, producers can increase output as they become more efficient, leading to higher overall output. Therefore, prices drop and output increases due to the technological innovation.

If an Advance in Technology Shifts the Long-Run Aggregate Supply