Referring to a production possibilities curve and the goods being compared,depict the economic event.Assuming the United States was producing at full employment levels in the late 1980s,peace breaks out as the Cold War ends (guns vs.butter).
A)A movement from a point inside the curve to a point on or near the curve
B)A movement from a point on or near the curve to a point inside the curve
C)A shift in the entire curve to the right (outward)
D)A shift in the entire curve to the left (inward)
E)A movement along the curve

Question

Quizplus · Accepted Answer

The end of the Cold War and the subsequent reduction in military spending (guns) would allow resources to be reallocated to civilian goods (butter), representing a movement along the production possibilities curve rather than a shift of the curve itself. This is because the economy's resources are being reallocated between two types of goods without necessarily changing the total amount of resources or the economy's capacity to produce.

Referring to a Production Possibilities Curve and the Goods Being