-Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point a and Beta produces at point b, then
A) Alpha's and Beta's economic growth rates will be the same.
B) Alpha consumes less than Beta today, but it will grow faster than Beta.
C) Beta's future consumption will be greater than Alpha's.
D) Beta's economic growth rate will exceed Alpha's.

Question

-Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point a and Beta produces at point b, then
A) Alpha's and Beta's economic growth rates will be the same. 
B) Alpha consumes less than Beta today, but it will grow faster than Beta. 
C) Beta's future consumption will be greater than Alpha's. 
D) Beta's economic growth rate will exceed Alpha's.

Quizplus · Accepted Answer

Without specific details on points a and b, the general principle is that if one country consumes less today (implying more investment in capital goods), it is likely to grow faster than a country that consumes more (implying less investment). This is because investment in capital goods can increase future production capabilities.

-Two Countries, Alpha and Beta, Have Identical Production Possibilities Frontiers