How do technological advancements influence AS in the long run?

Technological advancements can increase aggregate supply (AS) in the long run by improving productivity and efficiency.

Technological advancements are a key driver of economic growth and can significantly influence the long-run aggregate supply (LRAS). The LRAS represents the total quantity of goods and services produced by an economy at full employment. It is determined by the economy's productive capacity, which is influenced by factors such as the quantity and quality of labour, capital, and technology.

Technological advancements can increase the LRAS by improving productivity and efficiency. Productivity refers to the amount of output produced per unit of input. When technology improves, firms can produce more output with the same amount of inputs, leading to an increase in productivity. For example, the introduction of automation and robotics in manufacturing has significantly increased the output per worker.

Efficiency, on the other hand, refers to the optimal use of resources to minimise waste and cost. Technological advancements can improve efficiency by enabling firms to use resources more effectively. For instance, advancements in data analytics can help firms optimise their supply chains, reducing waste and lowering costs.

Moreover, technological advancements can also lead to the development of new products and services, expanding the range of goods and services that an economy can produce. This can also increase the LRAS. For example, the development of digital technologies has led to the creation of new industries such as e-commerce and digital marketing.

However, it's important to note that the impact of technological advancements on the LRAS is not always positive. For instance, if the introduction of new technology leads to job displacement and higher unemployment, this could potentially reduce the LRAS in the short run. Additionally, technological advancements can also lead to increased income inequality, as those with the skills to use and benefit from new technology may see their incomes rise faster than those without such skills.

In conclusion, technological advancements can significantly influence the LRAS by improving productivity, efficiency, and expanding the range of producible goods and services. However, they can also have potential negative impacts such as job displacement and increased income inequality.