Question

When an economy’s production possibilities curve shifts outward due to capital formation or a technological advancement, the long-run aggregate supply curve?

Answer 1

Answer

Shifts outwards

Explanation

An outward shift in the economy's production possibilities curve reflects that a capital formation has been achieved or the economy has benefited from technological advancement. This results in increased resources available within the economy and hence positively impact the supply curve of the company allowing the aggregate supply to either elongate or shift outward, later of the option has higher probability to occur.