The concept of long run
Concept information:
Economic growth rate refers to the rate at which the output of an economy increases overtime. It is used as an indicator of economic well-being of a nation. Economic growth is used as the most powerful instrument for reducing poverty and improving the standard of living of the residents of a country.
Explanation of Solution
Long-run
The equation for long-run aggregate supply curve is given by:
Here,
An increase in economic growth will result in a rightward shift in the long-run aggregate supply curve from LRAS1 to LRAS2 as shown below:
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Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)
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