ECON1002 Question (1 Viewer)

[InHa]

This is sort of related to the group assignment question for Group 4. I've been looking everywhere for an answer, but I can't find one.

Does a permanent increase in productivity shift the aggregate expenditure curve upwards? Or does it not affect the AE curve?

 

[05er]

Aggregate is effected by all substantial changes to productivity. Thus, a PERMANENT increase would effect it a fair bit; depending on the size of growth.

 

[xiao1985]

lol abit late *cough* *cough*

but initially, it will shift LRAS right wards, then:
-by neoclassical: economy will slowly adjust bak to E
-by keynesian: govt intervention needed to boost AD to E...