Chinaʹs State Council has encouraged more spending to ʺimprove transportation links and other infrastructure... .ʺ It will also ʺstep up its spending on vocational training and other educational programs for adults.ʺ
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of Chinaʹs PPF. As a result of enacting the policies, Chinaʹs PPF will
A) shift inward.
B) become flatter.
C) shift outward.
D) rotate outward.

Question

Quizplus · Accepted Answer

Both policies encourage investment in the economy, which will lead to an increase in capital goods production and thus shift the PPF outward. Additionally, the investment in vocational training and educational programs will increase human capital, allowing the economy to produce more efficiently and also shift the PPF outward.

Chinaʹs State Council Has Encouraged More Spending to ʺImprove Transportation