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, we would expect
I. an expansion of China's production possibilities.
II. capital accumulation.
III. an increase in human capital.
A) i and II only.
B) i, II and III.
C) i and III only.
D) II and III only.

Question

Quizplus · Accepted Answer

The policies described involve investing in infrastructure and education, which would lead to capital accumulation (physical capital through infrastructure and human capital through education), thereby expanding China's production possibilities.

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