Which of the following shifts the long-run aggregate supply curve to the right?
A)both an increase in the capital stock and technological improvements
B)an increase in the capital stock but not technological improvements.
C)an increase in the capital stock but not technological improvements
D)neither an increase in the capital stock nor an technological improvements

Question

Quizplus · Accepted Answer

An increase in the capital stock and technological improvements both increase the productivity of labor, which leads to an increase in potential output and shifts the long-run aggregate supply curve to the right. Option B is incorrect because technological improvements are also necessary for a rightward shift. Option C is incorrect because it is duplicated with B. Option D is incorrect because both capital stock and technology are necessary for a rightward shift.

Which of the Following Shifts the Long-Run Aggregate Supply Curve