An increase in the quantity of capital increases ________ and increase in the full-employment quantity of labor increases ________.
A) both the SAS and the LAS; only the SAS
B) both the SAS and the LAS; only the LAS
C) both the SAS and the LAS; both the SAS and the LAS
D) only the LAS; both the SAS and the LAS

Question

Quizplus · Accepted Answer

An increase in the quantity of capital and an increase in 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.

An Increase in the Quantity of Capital Increases ________ and Increase