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Over the long run, productivity growth lets the same quantity of labor produce more output. What effect does higher productivity have on the aggregate supply curve?
AIt shifts the AS curve to the left
BIt has no effect on the AS curve
CIt shifts the AS curve to the right
DIt makes the AS curve perfectly horizontal
Answer & Solution
Correct answer: C. It shifts the AS curve to the right
1. Productivity growth means firms get more output from the same workers and capital.
2. That lets firms produce a greater quantity of output at every given price level.
3. A curve showing greater output at every price level has shifted to the right.
4. This is treated as the single most important long-run driver of AS shifts.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 10 "The Aggregate Demand/Aggregate Supply Model", section 10.3 | Shifts in Aggregate Supply_
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