Purchasing new capital ________.
A) creates an upward movement along the aggregate production function
B) creates a downward movement along the aggregate production function
C) shifts the aggregate production function upward
D) shifts the aggregate production function downward

Question

Quizplus · Accepted Answer

Purchasing new capital shifts the aggregate production function upward because it increases the economy's productivity and output potential. This is because the new capital introduces new and more efficient methods of production.

Purchasing New Capital ________