Use the following graph to answer the following questions.

-If net investment is negative but technology has advanced,then
A) the production function will shift upward and capital is unchanged.
B) the production function will shift downward and capital is unchanged.
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 a downward movement along the production function.

Question

Use the following graph to answer the following questions.
 
-If net investment is negative but technology has advanced,then
A) the production function will shift upward and capital is unchanged. 
B) the production function will shift downward and capital is unchanged. 
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 a downward movement along the production function.

Quizplus · Accepted Answer

Negative net investment means capital stock is decreasing, causing a downward movement along the production function. However, technological advancement shifts the production function upward.

Use the Following Graph to Answer the Following Questions