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Question 11

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Use the following to answer questions.
Exhibit: Aggregate Production Function, Labor Market, and LRAS Use the following to answer questions. Exhibit: Aggregate Production Function, Labor Market, and LRAS   -(Exhibit: Aggregate Production Function, Labor Market, and LRAS)  If a change in technology moves the aggregate production function in Panel (a)  upwards, what happens to the economy's potential output? A)  Potential output remains unchanged. B)  Potential output increases. C)  Potential output decreases. D)  Potential output could increase or decrease depending on what happens in the labor market.
-(Exhibit: Aggregate Production Function, Labor Market, and LRAS) If a change in technology moves the aggregate production function in Panel (a) upwards, what happens to the economy's potential output?


A) Potential output remains unchanged.
B) Potential output increases.
C) Potential output decreases.
D) Potential output could increase or decrease depending on what happens in the labor market.

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