increase; both long-run and short-run aggregate supply decrease Question 2 Refer

Question

increase; both long-run and short-run aggregate supply decrease Question 2 Refer to the figure to answer the following questions Price level LRAS, LRAS2 SRAS 594% AD Real GDP Based on the figure, which of the following would cause the long-run equilibrium point to change from point B to point D? O The population has aged and there are fewer people in the labor force O Firms and workers expected the price level to rise. O The economy experienced an increase in government spending. O The economy was in an expansion and has adjusted. O The country's overall productivity increased. Question 3 1 pts

Explanation / Answer

Based on the figure,the country's overall productivity increased would cause the long run equilibrium point to change from point B to point D.

When overall productivity of the country increases, the aggregate supply curve shifts to the right. This situation results in higher output & lower unemployment.The higher level of productivity shifts the SRAS curve to the right means there is a rise in real GDP & fall in the price of major inputs. Improved productivity means production of greater quantity of output at each pricelevel.

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