ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The aggregate supply curve shifts to the right as productivity increases or the price of key inputs falls, making a combination of lower inflation, higher output, and lower unemployment possible.

Detailed explanation-2: -Lower production costs will increase the aggregate supply in the economy. The aggregate supply curve will shift to the right.

Detailed explanation-3: -What Shifts Aggregate Supply? Shifts in the short run aggregate supply curve are caused by changes in inflationary expectations; changes in worker force and capital stock availability; changes in government action (not the same as government expenditure); changes in productivity; and supply shocks.

Detailed explanation-4: -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-5: -What causes the long run aggregate supply curve to shift? Factors that shift the long-run aggregate supply include labor changes, capital changes, natural resources, and technology changes.