An increase in the production of capital goods
A) must increase the current production of consumer goods.
B) must decrease the future production of consumer goods.
C) shifts the production possibilities frontier inward in the future.
D) shifts the production possibilities frontier outward in the future.

Question

Quizplus · Accepted Answer

An increase in the production of capital goods, which are goods used to produce other goods, enhances a country's productive capacity. Over time, this leads to an outward shift in the production possibilities frontier (PPF), indicating an increase in the potential output of both capital and consumer goods.

An Increase in the Production of Capital Goods