With an increase in the capital stock, the short-run aggregate supply curve
A) remains as it is.
B) shifts rightward.
C) shifts leftward.
D) becomes steeper.

Question

Quizplus · Accepted Answer

An increase in the capital stock increases the productive capacity of the economy, leading to a rightward shift in the short-run aggregate supply curve as firms can produce more at every price level.

With an Increase in the Capital Stock, the Short-Run Aggregate