-Refer to Exhibit 17-3 Assume that the starting point on the production function is point A.After an increase in the technology coefficient,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________.. A) movement along the production function to point C; LRAS₂; economic growth B) shift upward of the production function to point B; LRAS₂; economic growth C) movement along the production function to point C; LRAS₃; a shrinking economy D) shift upward of the production function to point B; LRAS₃; a shrinking economy

Question

Quizplus · Accepted Answer

An increase in the technology coefficient would cause an upward shift of the production function to point B, resulting in a shift of the LRAS curve from LRAS₁ to LRAS₂, which represents economic growth. Movement along the production function would only occur if there were a change in the quantity of inputs or a change in the price level, neither of which is mentioned in the exhibit. Option C and D are incorrect because they both suggest a shrinking economy, which is not the result of an increase in the technology coefficient.

-Refer to Exhibit 17-3 Assume That the Starting Point on the Production