Figure 8-6 -Refer to Figure 8-6. Assume That the Economy Is Initially

Figure 8-6
-Refer to Figure 8-6. Assume that the economy is initially in long-run equilibrium. What happens in the long-run if the capital stock in this economy increases over time?

A) The nation's capacity to produce will increase as represented by a rightward shift of the long-run aggregate supply curve.
B) The nation's capacity to produce will increase as represented by a rightward shift of the short-run aggregate supply curve. The long-run aggregate supply curve and the aggregate demand curves remain unchanged.
C) The nation's capacity to produce will increase as represented by a rightward shift of the long-run aggregate demand curve.
D) The nation's capacity to produce will increase as represented by a rightward shift of the short-run aggregate supply curve and the aggregate demand curve. The long-run aggregate supply curve remains unchanged.