Suppose a hurricane destroys 20 percent of the capital stock in a country. In the long run, output will
________ and the price level will ________.

Question

Quizplus · Accepted Answer

In the long run, the destruction of capital stock reduces the productive capacity of the economy, leading to a decrease in output. The reduced supply of goods and services can lead to an increase in the price level due to scarcity.

Suppose a Hurricane Destroys 20 Percent of the Capital Stock