If a country transfers resources from the production of consumption goods to the production of capital goods, the result will be to

Question

Quizplus · Accepted Answer

The production of capital goods leads to an increase in the production capacity of an economy, which results in higher future consumption as the economy becomes more efficient and productive. This may temporarily lower current living standards due to reduced consumption in the short run, but it should raise future consumption levels and therefore improve long-term growth prospects.

If a Country Transfers Resources from the Production of Consumption