Technological advancements primarily affect aggregate supply by:

• A. Decreasing overall productivity
• B. Leading to higher production costs
• C. Improving productivity and shifting the supply curve outward
• D. Creating more regulations for production

Answer: (C)

Technological advancements primarily enhance aggregate supply by improving productivity, which leads to an outward shift of the supply curve. When businesses adopt new technologies, they can produce goods and services more efficiently, often with lower resource input or at a faster pace. This increase in productivity means that firms can supply more at each price level, effectively leading to a horizontal shift of the aggregate supply curve to the right.

As a result, the economy can experience growth without necessarily increasing prices, as the improved technology allows producers to meet higher demand with greater efficiency. This concept is fundamental to understanding the relationship between technology and aggregate supply, highlighting how innovations can stimulate economic activity and enhance the overall productive capacity of the economy.