Use the following to answer questions .
Exhibit: Aggregate Production Function
-(Exhibit: Aggregate Production Function) Which of the following could cause the production function to shift upward?

Question

Use the following to answer questions .
Exhibit: Aggregate Production Function 
-(Exhibit: Aggregate Production Function) Which of the following could cause the production function to shift upward?

Quizplus · Accepted Answer

An increase in the availability of natural resources would cause the production function to shift upward because more inputs are available, allowing for more output to be produced. Increases in the quantity of labor employed and the real wage rate would increase output, but through movements along the production function rather than a shift. An increase in the economy's average price level would not affect the production function but would impact the economy's aggregate supply curve.

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