Abstract
SUMMARYAggregate economic activity is determined by the point of intersection between the aggregate demand function and the aggregate supply function. Recently, economists pay little attention to the determinants of aggregate supply function. Therefore, a gap remains between the quite well‐advanced theories of the aggregate supply. In this paper I construct a model that describes the supply side of a macroeconomy. Within the framework of the Keynesian system and the classical system, the relationship between technological change and aggregate supply function is examined. It is shown that technological change will shift the aggregate supply function to the right.
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