Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result, the:
A)long-run aggregate supply curve will shift to the right.
B)long-run aggregate supply curve will shift to the left.
C)economy will move up along the long-run aggregate supply curve.
D)economy will move down along the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

An increase in machinery and capital equipment as foreign entrepreneurs increase investment will lead to an increase in the economy's productive capacity in the long run by shifting the long-run aggregate supply curve to the right. This means that the economy can produce more goods and services at every price level.

Suppose a Developing Country Receives More Machinery and Capital Equipment