Suppose an economy experiences an increase in productivity.The AD curve will most likely shift to the left when this increase in productivity is the result of which of the following?
A)a major technological breakthrough
B)a reorganization of production designed to reduce costs with existing technology
C)an increase in human capital
D)government subsidies for higher education
E)none of the above

Question

Quizplus · Accepted Answer

An increase in productivity due to a reorganization of production designed to reduce costs with existing technology will shift the AD curve to the left. This is because the same level of output can be produced with fewer inputs, which reduces the overall demand for goods and services.

Suppose an Economy Experiences an Increase in Productivity