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Increased investment leads to enhanced productivity, which shifts LRAS to the right.
Higher investment spending can cause inflation in the long run, without affecting LRAS.
Investment in technology and equipment contributes to capital formation, increasing the capital stock.
Reducing investment spending can lead to a leftward shift in the LRAS due to decreased productivity.
Investment primarily affects short-run aggregate supply, with minimal impact on long-run supply.
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Investment and Long-Run Supply
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