ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A shift to the right of AD
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A shift to the left of AD
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A shift to the right of LRAS
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A shift to the left of LRAS
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Detailed explanation-1: -A rightward shift in the LRAS (from LRAS1 to LRAS2) will increase real GDP (from Y1 to Y3), and a leftward shift (from LRAS1 to LRAS2) will decrease real GDP (from Y1 to Y2). LRAS shows the number of products and services produced in the economy in the long term.
Detailed explanation-2: -The economy grows if the PPC shifts outward because of more/better resources or technological advances. For the same reason, the LRAS curve shifts outward with more/better resources or if there are technological advances. Aggregate output in the economy can actually be greater than LRAS in the short run.
Detailed explanation-3: -Answer and Explanation: To shift the long-run aggregate supply curve to the right, you must increase the potential output of an economy assuming it is using all resources available. If labor productivity rises, the potential output of an economy increases since you can produce more output per unit of labor.
Detailed explanation-4: -There are three main factors that drive economic growth: Accumulation of capital stock. Increases in labor inputs, such as workers or hours worked. Technological advancement.