An increase in ________ increases potential GDP and ________ aggregate supply.

Question

Quizplus · Accepted Answer

An increase in technology leads to higher productivity and efficiency in production, which increases potential GDP and shifts the aggregate supply curve to the right, increasing output at any given price level. The other choices are incorrect as an increase in the money wage rate or the money price of oil would increase production costs and decrease aggregate supply, while a decrease in the money wage rate would lead to lower production costs but also lower aggregate supply due to lower productivity.

An Increase in ________ Increases Potential GDP and ________ Aggregate

An Increase in Increases Potential GDP and Aggregate