Answer to Question #88512 in Microeconomics for Martha

Question

According to the AD-AS model, a shift of AS curve from AS to AS1 is the result of

Answer 1

The AD–AS model is a macroeconomic model which explains price level and the output through the relationship of the aggregate demand and the aggregate supply.

According to this model a shift of AS curve from AS to AS1 is the result of a higher level of productivity, because with an improved productivity, firms or companies can produce a higher or greater quantity of output at each price level thus reflects the rise in potential GDP in the economy.