If the production of capital goods is shown along the horizontal axis of a production possibilities curve, and the production of consumer goods is shown along the vertical axis of a production possibilities curve, and the economy desires to have a rapid rate of economic growth, then the economy should produce at a point

Question

Quizplus · Accepted Answer

Producing at a point near the horizontal axis, concentrating on the production of capital goods, will lead to a higher rate of economic growth in the long run. This is because capital goods are tools and equipment used in the production of consumer goods. By increasing the production of capital goods, the economy is investing in its infrastructure, which will allow it to produce more goods in the future. This increased production will result in higher economic growth rates. While producing more consumer goods may lead to higher short-term satisfaction, it will not result in as much long-term economic growth as producing more capital goods.

If the Production of Capital Goods Is Shown Along the Horizontal