As an economy grows, it becomes more efficient in its production and utilization of resources, hence its production possibility frontier (PPF) shifts outward indicating an increase in the potential production possibilities. Therefore, choice D, "its PPF shifts outward," is the best answer.

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As an Economy Grows

Question 51

Multiple Choice

As an economy grows,

A) the opportunity cost of production will increase.
B) it can eliminate scarcity.
C) the opportunity cost of production will approach 0.
D) its PPF shifts outward.
E) its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF.

Correct Answer: