In the above figure, starting at E3, if there is an increase in technology that causes a temporary increase in production capabilities
A. aggregate supply would shift to SRAS1 and LRAS1 would shift to LRAS1.
B. aggregate supply would shift to SRAS2 and LRAS1 would shift to LRAS1.
C. aggregate supply would shift to SRAS1 and then return to SRAS2.
D. aggregate supply would shift to SRAS0 and LRAS1 would shift to LRAS0.
Answer: C
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Refer to the above figure. At the initial long-run equilibrium, the price level is ________, and the price level will be ________
A) 20; 40 B) 20; 45 C) 40; 45 D) 20; 20
If a significant portion of firms in the economy does not immediately adjust product prices, then the short-run aggregate supply curve
A) slopes downward. B) slopes upward. C) is horizontal. D) is vertical.
The cost of producing an additional unit of a good or service that is borne by the producer of that good or service is the
A) marginal external cost. B) marginal private cost. C) marginal social cost. D) None of the above answers is correct.
An inferior good has an income elasticity of demand that is
A) positive. B) negative. C) positive but less than 1. D) zero.