An increase in investment combined with a decrease in education would have an indeterminate effect on both short run and long run aggregate supply.

Question

Quizplus · Accepted Answer

An increase in investment can boost both short-run and long-run aggregate supply by increasing capital stock and productivity. However, a decrease in education can reduce the quality of labor, potentially lowering productivity and aggregate supply in the long run. The net effect on aggregate supply is uncertain without knowing the relative magnitudes of these changes.

An Increase in Investment Combined with a Decrease in Education