-(Figure: The Solow Model)Which of the following events would NOT shift the production function from Y₁ to Y₂ in the accompanying diagram of the Solow model? A) increases in productivity B) better ideas C) physical capital accumulation D) advances in technological knowledge

Question

Quizplus · Accepted Answer

Physical capital accumulation does not shift the production function in the Solow model; instead, it moves the economy along the existing production function by increasing output due to more capital being used in production. Shifts in the production function are caused by changes that affect productivity, such as technological advances, better ideas, or increases in productivity, not by changes in the amount of physical capital.

-(Figure: the Solow Model)Which of the Following Events Would NOT