An Increase in Productivity Will

question 129

Multiple Choice

An increase in productivity will

• A) increase aggregate demand.
• B) increase aggregate supply.
• C) increase aggregate supply and aggregate demand.
• D) decrease aggregate supply and aggregate demand.

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Definitions:

Aggregate Demand

The total demand for all goods and services in an economy at a given general price level and in a given time period.

Aggregate Supply

The aggregate output of goods and services that companies in a national economy aim to market within a given timeframe.

Classical Economic Theory

A broad school of thought in economics that emphasizes the role of market forces and the flexibility of prices in achieving economic equilibrium, advocating minimal government intervention.

Stagflation

A situation in an economy where the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.