ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A higher level of productivity shifts the SRAS curve to the right because with improved productivity, firms can produce a greater quantity of output at every price level.

Detailed explanation-2: -Answer and Explanation: The short-run aggregate supply curve can increase if future prices are expected to fall. This is because suppliers would rather sell goods today at a higher price than wait for later when the price is expected to be lower. Thus, more output will be supplied at each price level.

Detailed explanation-3: -The Aggregate Demand/ Aggregate Supply (AD/AS) model shows the income determination and price levels. When productivity increases in an economy, the AS curve shifts downwards to the right showing an increase in the aggregate output and a decrease in the price level.

Detailed explanation-4: -An increase in aggregate demand in the short-run aggregate market results in an increase in the price level and an increase in real production. The level of real production resulting from the shock can be greater or less than full-employment real production.

Detailed explanation-5: -Productivity affects both the short and long run aggregate supply of a country. In the short run productivity improvements can reduce production costs and in the long run improvements in productivity increase capacity from existing factor inputs.