China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults." www.nytimes.com, Keith Bradsher, October 19, 2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, China's PPF will
A) shift outward.
B) shift inward.
C) rotate outward.
D) become flatter.

Question

Quizplus · Accepted Answer

The policies will likely lead to an increase in both capital and consumption goods, causing an outward shift of the PPF.

China's State Council Has Encouraged More Spending to "Improve Transportation