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Chapter 23: Q 5. (page 617)

If the labor force becomes more productive over time, how would the long-run aggregate supply curve be affected?

Short Answer

Expert verified

Long-run aggregate supply curve shifts to the right.

Step by step solution

01

Step 1. Define aggregate demand and aggregate supply.

Aggregate demand is defined as the total amount of demand produced in the economy for all finished goods and services.

Aggregate supply, often known as total production, is the total amount of products and services in a given economy over a certain time period at a given overall price.

02

Step 2. How would the long-run aggregate supply curve be affected?

As the labor force becomes more productive over time, the overall amount of labor supplied in the economy rises. This improves the long-run aggregate supply curve by shifting it to the right and raising potential output.

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