An increase in the amount of capital leads to ________the aggregate production function________ and a technological advance leads to ________the aggregate production function.
A) a movement along; a movement along
B) an upward shift; an upward shift
C) a movement along; an upward shift
D) a downward shift; an upward shift

Question

Quizplus · Accepted Answer

An increase in the amount of capital leads to an upward shift of the aggregate production function because more capital allows for greater production efficiency and output. A technological advance also leads to an upward shift of the aggregate production function because it allows for better technology and processes, leading to higher production efficiency and output. Therefore, neither option involves a movement along the production function, making choice C incorrect. Additionally, neither option involves a downward shift, making choice D incorrect. The correct choice is B.

An Increase in the Amount of Capital Leads to ________The