Principles of Macroeconomics / Unit 8 MAC 0716 short lesson, about 20 seconds
Productivity Shifts Both Curves
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The idea
Productivity growth shifts short-run supply right and potential GDP right as well, because the same workers and machines now produce more.
In practice
More output at every price level, and a higher ceiling at full employment.
Where people slip
Its effects are slow, a few percentage points a year, which is why growth is a long-run story and shifts in demand are a short-run one.
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