A technological improvement in the physical capital available to the firm has a similar impact on a firm's desired capital stock as

Question

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A technological improvement in physical capital leads to a reduction in the cost of capital goods, making it cheaper for firms to acquire physical capital. This, in turn, leads to an increase in the desired capital stock of the firm as it becomes more profitable for the firm to invest in physical capital.

A Technological Improvement in the Physical Capital Available to the Firm