Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, population (800,000), education of workforce, and value of natural resources owned.
-Refer to the scenario above.Over time,Sourland's aggregate production function shifts upward.Why might this be the case?
A) More output can be produced with the same amount of physical capital stock and total efficiency units of labor.
B) Research and development undermine the output of physical labor.
C) The corporate tax rate has been reduced.
D) The number of educated people in Sourland has increased.

Question

Quizplus · Accepted Answer

An upward shift in the aggregate production function indicates an improvement in the ability to produce more output with the same inputs, which can result from technological advancements, improvements in efficiency, or other factors that enhance productivity without necessarily increasing the amount of physical capital or labor.

Scenario: Two Neighboring Countries, Sweetland and Sourland, Are Identical in Terms