Suppose that the production function for an economy is graphed with Real GDP on the vertical axis and labor on the horizontal axis.When the level of capital in this economy rises,it causes ____________________which shifts the LRAS curve ____________ resulting in ______________________.
A) a movement down along a given production function; leftward; a shrinking economy
B) the production function to shift downward; leftward; a shrinking economy
C) a movement up along a given production function; rightward; economic growth
D) the production function to shift upward; rightward; economic growth

Question

Quizplus · Accepted Answer

An increase in capital causes an upward shift in the LRAS curve, resulting in the production function shifting upward and to the right, indicating economic growth. There is no reason to expect a movement down along the production function, a downward shift in the production function, or a leftward shift in the LRAS curve, which would all suggest a shrinking economy.

Suppose That the Production Function for an Economy Is Graphed