The land of Ur increases its capital stock. As a result, the long- run aggregate supply curve shifts
And so does the curve.
A) rightward; aggregate demand
B) rightward; short- run aggregate supply
C) leftward; aggregate demand
D) leftward; short- run aggregate supply

Question

Quizplus · Accepted Answer

The increase in capital stock leads to an increase in productivity, which in turn increases the potential output of the economy. This shift in the long-run aggregate supply curve results in a rightward shift in the short-run aggregate supply curve as well. The aggregate demand curve may or may not shift due to other factors affecting the economy.

The Land of Ur Increases Its Capital Stock