Question

3) According to Mateer and Coppock (2017): Principles of Macroeconomics

The factors that shift long-run aggregate supply are the same factors that determine economic growth: resources, technology, and institutions. (p. 416)

Here are some more details on these three determinants of aggregate supply:

The supply of resources refers to natural resources, physical capital, and human capital.

The level of technology affects productivity.

Institutions of the economic system refers to taxes, government subsidies, and government regulations, among other "institutions."

a) Discuss how one of the above three determinants of aggregate supply (resources, technology, and institutions) affects the long-run aggregate supply curve.

b) Discuss a real-world example of how your workplace's supply (production of goods or services) has been affected by a change in the determinant you discussed above. Please note: If you cannot relate the determinant to your workplace, then discuss an example from another workplace you are familiar with or a workplace that has recently been the subject of a newspaper or magazine article or otherwise in the news.

Answer 1

a. Investment in technological development in a nation shifts the long run aggregate supply curve of the economy rightwards. Technological development improves productivity of a company and thus increases output produced at each price level and thus company becomes more profitable.

b. The best example of the above case is Apple. The main reason of Apple being the leader in the mobile industry is its investment in research and development.This has improved productivity and differentiated its product from other products and shifted its long run aggregate supply curve rightwards.