Author Question: Other things constant, a decrease in the price of fertilizer will: a. increase the supply of wheat. ... (Read 577 times)

Jipu 123 · **on:** Jun 30, 2018

Other things constant, a decrease in the price of fertilizer will:
a. increase the supply of wheat.
b. decrease the supply of wheat.
c. increase the demand for wheat.
d. decrease the demand for wheat.

Question 2

Explain how changes in the stock of capital affect aggregate supply.

huda · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

a

Answer to Question 2

Changes in the stock of capital will alter the amount of goods and services the economy can produce. Investing in capital improves the quantity and quality of the capital stock, which lowers the cost of production in the short run. This change in turn shifts the short-run aggregate supply curve rightward and firms will supply more output at every price level. It also allows output to be permanently greater than before, shifting the long-run aggregate supply curve rightward, ceteris paribus.