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Figure: Technological Progress and Productivity Growth
-(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in foreign investment spending?

Question

Use the following to answer questions :
Figure: Technological Progress and Productivity Growth 
-(Figure: Technological Progress and Productivity Growth) Look at the figure Technological Progress and Productivity Growth. Which of the following changes in real GDP is most likely to have resulted from an increase in foreign investment spending?

Quizplus · Accepted Answer

An increase in foreign investment spending would lead to an increase in capital, which would shift the production function to the right, resulting in both an increase in output (A to B) and an increase in productivity (B to C).

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