Over time in a growing economy, the long run aggregate supply curve will
A) move so as to match the short run aggregate supply (SRAS) curve.
B) shift outward to the right.
C) shift inward to the left.
D) become increasingly steep.

Question

Quizplus · Accepted Answer

Over time, technological advancements, increased capital investment, and growth in the labor force lead to an increase in potential output, causing the long-run aggregate supply curve to shift outward to the right. This means that the economy is able to produce more output at every price level in the long run.

Over Time in a Growing Economy, the Long Run Aggregate