An increase in the quantity of capital increases_________ and increase in the full employment quantity of labor increases__________ .
A) the SAS and the LAS; only the SAS
B) only the LAS; the SAS and the LAS
C) the SAS and the LAS; only the LAS
D) the SAS and the LAS; the SAS and the LAS

Question

Quizplus · Accepted Answer

An increase in the quantity of capital and the full employment quantity of labor both increase the Short-Run Aggregate Supply (SAS) and the Long-Run Aggregate Supply (LAS) because they enhance the economy's productive capacity and potential output.

An Increase in the Quantity of Capital Increases_________ and Increase