If government legislation requires businesses to switch to a different method of production that generates 50 percent fewer greenhouse gas emissions, compliance to this policy (assuming no other changes) can be illustrated in the Solow model by ______ the aggregate production function that leads to a ______ level of real GDP per person.
A) a shift up of; higher
B) a shift down of; lower
C) a movement to the right on; higher
D) a movement to the left on; higher

Question

Quizplus · Accepted Answer

The switch to a production method with fewer emissions likely involves higher costs or less efficient technology, shifting the production function down and resulting in a lower level of real GDP per person.

If Government Legislation Requires Businesses to Switch to a Different