Question 67

Both curves shift to the right.

Technological advancements typically lead to increased productivity and efficiency, which results in both the Short-Run Aggregate Supply (SRAS) and the Long-Run Aggregate Supply (LRAS) shifting to the right.

A) both left

This option is incorrect because a technological advancement does not reduce productivity. Instead, it enhances production capabilities, which would not lead to a leftward shift in either SRAS or LRAS.

B) both right

This option is correct as technological advancements increase the potential output of an economy, causing both the SRAS and LRAS to shift rightward. This reflects an increase in the aggregate supply due to improved efficiency and lower production costs.

C) SRAS left, LRAS right

This option is incorrect because a leftward shift of the SRAS would indicate a decrease in supply, which does not occur with technological improvements. While LRAS shifts right due to enhanced productive capacity, SRAS would also shift right, not left.

D) no change

This option is incorrect as it suggests that technological advancements have no impact on supply. In reality, such advancements significantly enhance production capabilities, leading to rightward shifts in both SRAS and LRAS.

Conclusion

In summary, the correct answer is that both SRAS and LRAS shift to the right due to technological advances, which increase productivity and efficiency in the economy. All other options fail to acknowledge the positive impact of technology on aggregate supply.