Exhibit 17-3

-Refer to Exhibit 17-3 Assume that the starting point on the production function is point A. After an increase in the quantity of capital,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

Question

Exhibit 17-3

-Refer to Exhibit 17-3 Assume that the starting point on the production function is point A. After an increase in the quantity of capital,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

Quizplus · Accepted Answer

An increase in the quantity of capital would shift the production function upward to point B. This would cause a shift in the LRAS curve from LRAS₁ to LRAS₂, resulting in economic growth. There would not be a movement along the production function to point C or a shrinking economy.

Exhibit 17-3 -Refer to Exhibit 17-3 Assume That the Starting Point on 17-3