Consider a country that suffered through five years of civil war but now has a stable government that has the support of the majority of the people.In this country,we are likely to observe
A) an increase in physical capital and an upward shift of the production function.
B) an increase in physical capital but no change in the production function.
C) an upward shift of the production function but no change in physical capital.
D) no change in physical capital or the production function.
E) an increase in physical capital and a downward shift of the production function.

Question

Quizplus · Accepted Answer

The end of civil war and establishment of stable government leads to an increase in physical capital as investment and economic activity increase. This, in turn, results in an upward shift of the production function, leading to higher output and economic growth.

Consider a Country That Suffered Through Five Years of Civil