Figure 8-5 Panel (A) Shows an Economy's Aggregate Production

question 31

Multiple Choice

Figure 8-5 Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve.
-Refer to Figure 8-5. If a change in technology moves the aggregate production function in Panel (a) upwards, what happens to the economy's potential output?

• A) Potential output remains unchanged.
• B) Potential output increases.
• C) Potential output decreases.
• D) Potential output could increase or decrease depending on what happens in the labor market.

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Definitions:

Sleepy

A state of tiredness or drowsiness where an individual feels the need for sleep, often due to lack of rest, exertion, or specific sleep disorders.

Cave

A natural underground space large enough for a human to enter, often formed by the weathering of rock and leaving behind a void.

Hour Intervals

Fixed periods of time, each lasting exactly sixty minutes, often used as a measure for scheduling or tracking events.

Unchanging Environment

A situation or setting that remains the same over time, without variation or alteration.