Question

If the labor force becomes more productive over time, how would the long-run aggregate supply curve be affected?

Short answer

Long-run aggregate supply curveshifts to the right.

Step-by-step solution

Step 1. Define aggregate demand and aggregate supply.

The total quantity of demand for all finished products and services generated in an economy is measured as aggregate demand.

Aggregate supply, often known as total production, is the whole supply of goods and services produced within an economy in a given period at a specific overall price.

Step 2. How would the long-run aggregate supply curve be affected?

The total amount of labour supplied in the economy rises as the labour force grows more productive over time. This benefits long-run aggregate supply curve by moving the curve to the right and increasing potential output.