If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must
A) be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods.
B) must be producing outside the production possibilities frontier and will continue to do so in the future.
C) must not have private ownership of property and will have to follow planning authoritiesʹ decisions today and in the future.
D) be using resources inefficiently today, but will be more efficient in the future.

Question

Quizplus · Accepted Answer

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it is operating at a point inside the production possibilities frontier. By shifting its production towards more capital goods, it will move towards the production possibilities frontier and eventually shift the frontier outward due to technological advancements. Therefore, option A is the correct choice.

If a Country Must Decrease Current Consumption to Increase the Amount