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5 November, 18:57

The country of Alcazar has been growing at an impressive pace for the last five years. With improvements in technology, many industries have recorded remarkable growth in productivity. An accountant, Lucas Eggers, however argues that people in the economy are not necessarily better off because mechanization and technology usually eliminate jobs. Toby Hartmann, who works at a bank, disagrees with Lucas. He thinks that Alcazar's high economic growth and wellbeing have been driven by this increase in productivity. Which of the following are Lucas and Toby most likely to agree with?

A. The aggregate supply curve in Alcazar has shifted outward.

B. There is a shortage in the labor market.

C. The level of poverty in the economy has gone down.

D. Productivity gains have been fully transferred to workers.

E. The representative per-worker production function in Alcazar has become flatter.

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  1. 5 November, 19:00
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    A. The aggregate supply curve in Alcazar has shifted outward.

    Explanation:

    As the economy has increased impressively and that the production has outgrown with the use of new technology, and therefore, with huge production there is huge supply and accordingly both shall agree on the same.

    As Lucas states that there is high production because of technology, and there is high supply, but it eliminates job as with use of technology involvement of labor decreases.

    Toby Hartman also agrees with the same as with high economic growth there is high productivity and accordingly high supply.
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