When the quantity of capital increases, then the
A) LAS curve shifts rightward and the SAS curve does not shift.
B) SAS curve shifts rightward and the LAS curve does not shift.
C) SAS curve shifts rightward and the LAS curve shifts rightward.
D) SAS curve shifts rightward and the LAS curve shifts leftward.

Question

Quizplus · Accepted Answer

An increase in capital increases the potential output of an economy, shifting the Long-Run Aggregate Supply (LAS) curve rightward. It also increases the short-run production capacity, shifting the Short-Run Aggregate Supply (SAS) curve rightward.

When the Quantity of Capital Increases, Then the