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Suppose there is an increase in the capital stock. The​ long-run aggregate supply curve will shift...

Suppose there is an increase in the capital stock. The​ long-run aggregate supply curve will shift to the ▼ left right ​, the equilibrium price level will ▼ decrease increase ​, and equilibrium GDP will ▼ increase decrease

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Answer #1

right

decrease

increase

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A long-run aggregate supply curve is vertical at the potential output level. A potential output level is produced using all the available resources in the economy, and it changes if there is a change in the capital, labor or technology. The increase in capital stock increases potential output in the economy which shifts LRAS curve to the right. It decreases the price level in the new equilibrium and increases the real GDP.

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