China's State Council has encouraged more spending to "improve transportation links and other infrastructure... ." It will also "step up its spending on vocational training and other educational programs for adults."
HYPERLINK "http://www.nytimes.com/" www.nytimes.com, Keith Bradsher, October 19, 2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, China's PPF will
A) rotate outward.
B) become flatter.
C) shift inward.
D) shift outward.

Question

Quizplus · Accepted Answer

By encouraging more spending on infrastructure and education, China is investing in capital goods and human capital, which will allow for greater production possibilities in the future. This will shift the PPF outward, allowing for more production of both capital goods and consumption goods in the long run.

China's State Council Has Encouraged More Spending to "Improve Transportation