Figure 14-1
-Refer to Figure 14-1. Suppose the economy is operating at point m on curve A. The decision to move to point p
I. requires a sacrifice of current consumption.
II. requires a sacrifice of future consumption.
III. adds to the economy's capital stock assuming depreciation remains at a level corresponding to point m.
IV. enables the economy to increase both its consumption and investment in the future.

Question

Figure 14-1 
-Refer to Figure 14-1. Suppose the economy is operating at point m on curve A. The decision to move to point p 
I. requires a sacrifice of current consumption.
II. requires a sacrifice of future consumption.
III. adds to the economy's capital stock assuming depreciation remains at a level corresponding to point m.
IV. enables the economy to increase both its consumption and investment in the future.

Quizplus · Accepted Answer

Moving from point m to point p requires sacrifice of current consumption (I), adds to the economy's capital stock (III), and enables the economy to increase both its consumption and investment in the future (IV). It does not necessarily require a sacrifice of future consumption (II) as investment in capital increases productivity and can lead to higher future consumption.

Figure 14-1 -Refer to Figure 14-1. Suppose the Economy Is Operating at Is