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This will be a graph shifting question, which asks about the intuition of both the AD-AS figures and the I-NS figures, specifically relating them to
This will be a graph shifting question, which asks about the intuition of both the AD-AS figures and the I-NS figures, specifically relating them to long-term growth. Suppose that the economy uses (only) two major inputs in its production: capital (K) and labour (L). Suppose also that we are thinking about long-term growth, specifically through productivity growth. 1. Suppose that there is an increase in the productivity of input in this economy. What would we expect to happen to Y* in the long-run? Explain your answer. [2 points]
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