The function showing total spending on investment would be shifted inward and to the left by:
A)a technological innovation that increases the production function parameter A.
B)any event that raises the marginal product of capital.
C)any event that raises the purchase price of capital.
D)an accident that destroyed one-quarter of Canada's capital stock while leaving the labour supply intact.

Question

Quizplus · Accepted Answer

An increase in the purchase price of capital would make investment more expensive, reducing the total spending on investment and shifting the function inward and to the left.

The Function Showing Total Spending on Investment Would Be Shifted