Use the following graph to answer the following questions.

-If net investment is positive,then
A) the production function will shift upward.
B) the production function will shift downward.
C) there is an upward movement along the production function.
D) there is a downward movement along the production function.
E) there is an upward shift of the production function and an upward movement along the production function.

Question

Use the following graph to answer the following questions.
 
-If net investment is positive,then
A) the production function will shift upward. 
B) the production function will shift downward. 
C) there is an upward movement along the production function. 
D) there is a downward movement along the production function. 
E) there is an upward shift of the production function and an upward movement along the production function.

Quizplus · Accepted Answer

An increase in net investment will lead to an increase in capital stock and therefore there will be an upward movement along the production function. The production function itself does not shift. Therefore, choice C is the correct answer.

Use the Following Graph to Answer the Following Questions