In 2023, an article on bloomberg.com discussed a study by Erik Brynjolfsson of Stanford University and Danielle Li and Lindsey Raymond of MIT. The study found that giving customer support agents access to a large language model artificial intelligence (AI) program increased their productivity by an average of 14 percent. The increase in productivity was much larger than the increases firms generally experience from using new software. Suppose that using AI software in other firms results in similarly large productivity increases. Also suppose that firms respond by significantly increasing their investment spending on software and on computers capable of running sophisticated large language model AI software.

a. What effect would a large increase in productivity from sophisticated AI software have on the short-run and long-run aggregate supply curves?

b. What effect does an increase in business spending on software and computers have on the aggregate demand curve?

c. Use your answers to parts (a) and (b) to draw a dynamic aggregate demand and aggregate supply graph showing the effects of increased productivity and increased investment spending on the U.S. economy, holding constant any other factors that affect the economy.
Briefly explain what your graph is showing.