Question

11. Technological progress has what effect on the aggregate supply curve.

12. Supply-side economic policy consists of what?

Answer 1

11.

• Technological progress has a direct effect on the changes in the aggregate supply curve both in the long run and short run.
• When the technology advances, the aggregate supply curve always shifts to the right. This is because advancements in technology Increases the productivity of a firm or an industry.
• This allows them to supply more at same prices and hence earn more profits to eliminate the excess production costs.
• Excess supply will hence shift the aggregate supply curve in both long run and short run upwards and towards right.

12.

• Supply side ecomomic polices are aimed at improving the aggregate supply in an economy by Increasing the productivity levels.
• These policies try to increase the aggregate supply by maintaining both the quantity and quantity and by keeping the ecomomy stable.
• These policies which help in increasing the aggregate supply in the economy Includes improvements in labour productivity, increased competition and entrepreneurship involvements etc.
• Supply side ecomomic policies aim at increasing aggregate supply by keeping the inflation levels low, lower unemployment levels, trade balance etc.