Use the Following to Answer Questions

question 27

Multiple Choice

Use the following to answer questions
Exhibit: Aggregate Production Function, Labor Market, and LRAS
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS)
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:

Reciprocal

Reciprocal involves a mutual or cooperative exchange of actions or relations, such as mutual respect, or in mathematics, as a mathematical expression indicating inverseness.

Rewarding

pertains to the act of providing a positive response or reinforcement following a desired behavior, increasing the likelihood of the behavior's recurrence.

Proximal

Situated nearer to the center of the body or the point of attachment.

Reciprocity

A social principle that involves exchanging things with others for mutual benefit.