Answer to Question #178294 in Macroeconomics for Nathaly

Question

A new method of farming is developed that increases output by one-third. What will impact?

Answer 1

An rise in farm productivity will boost the economy's potential GDP. It will have a major effect on the LRAS. This will affect aggregate supply in the long run. The amount of money spent on new technology that allows a country's economy to generate more goods at a higher quality by using the same amount of finite resources. Long-term inward investment from outside the country allows for increased demand.