if the economy acquires a larger
amount of capital goods in the current year, does a larger or smaller outward shift in the production possibilities curve (PPC) result? Does the long-run aggregate supply (LRAS) curve shift more or less far to the right? Why?
If the economy acquires a larger amount of capital goods in the current year, a larger outward shift in the production possibilities curve (PPC) will result. This is because capital goods are used to produce other goods and services, and an increase in capital goods means that the economy can produce more goods and services overall.
The long-run aggregate supply (LRAS) curve will also shift more to the right. This is because a larger capital stock means there is more potential for economic growth in the long run. This increased potential for growth will lead to a greater shift in the LRAS curve.
If the economy acquires a larger amount of capital goods in the current year, it will result in a larger outward shift in the production possibilities curve (PPC). This is because an increase in capital goods allows for increased production capacity and efficiency in the economy.
The long-run aggregate supply (LRAS) curve will also shift more to the right. This is because an increase in capital goods leads to an increase in productive capacity in the long run. As the LRAS curve represents the level of potential output in the economy, an increase in capital goods will allow for a greater potential output, leading to a more significant rightward shift of the LRAS curve.
In summary, a larger acquisition of capital goods in the current year leads to a larger outward shift in the PPC and a more significant rightward shift of the LRAS curve due to increased production capacity and potential output in the long run.