What effect will the combination of an increase in the capital stock and a decrease in the natural resources that are available for production have on LRAS?
A)It will leave LRAS unchanged.
B)It will have an indeterminate effect on LRAS.
C)It will shift LRAS to the left.
D)It will shift LRAS to the right.

Question

Quizplus · Accepted Answer

An increase in capital stock tends to shift LRAS to the right, while a decrease in natural resources tends to shift it to the left. The net effect is indeterminate without knowing the relative magnitudes of these changes.

What Effect Will the Combination of an Increase in the Capital