?

Macroeconomics

Free Version

Upgrade subject to access all content

Moderate

LRAS Shift Out

MACRO-1QXEIN

Assume an economy is in equilibrium at its natural rate of output and that only a fraction of the firms in the economy have fixed prices. Assume there is an advance in technological progress that makes producers more productive.

In the AD-AS model, price levels in the economy will

and output levels will

. In the new equilibrium the economy will

.