Which of the following situations will cause the LRAS to shift leftward?
A)when a decrease in the capital stock occurs
B)when an increase in the capital stock occurs
C)when an advance in technology occurs
D)when an increase in the amount of labour available for production occurs

Question

Quizplus · Accepted Answer

A decrease in the capital stock would result in a leftward shift of the LRAS curve because it would reduce the economy's capacity to produce goods and services in the long run. The capital stock refers to the machinery, equipment, buildings, and other physical assets that businesses use to produce their output. A decrease in the capital stock may result from natural disasters, wars, or other events that damage or destroy productive capacity.

Which of the Following Situations Will Cause the LRAS to Shift