Use the following to answer question(s):
Exhibit: Consumer and Capital Goods

-(Exhibit: Consumer and Capital Goods) If the economy is on Curve 1, it:
A) will grow more quickly if it chooses point X.
B) will move to Curve 2 more quickly if it chooses point Y.
C) will find that choosing either point X or point Y will result in the same growth rate.
D) is at full employment at point X, but has unemployment at point Y.

Question

Use the following to answer question(s): 
Exhibit: Consumer and Capital Goods
 
-(Exhibit: Consumer and Capital Goods) If the economy is on Curve 1, it:
A) will grow more quickly if it chooses point X. 
B) will move to Curve 2 more quickly if it chooses point Y. 
C) will find that choosing either point X or point Y will result in the same growth rate. 
D) is at full employment at point X, but has unemployment at point Y.

Quizplus · Accepted Answer

Choosing point Y on Curve 1, which represents a higher investment in capital goods relative to consumer goods, will lead to faster economic growth. This is because investing in capital goods increases future production capacity, thereby facilitating a move to Curve 2 more quickly.

Use the Following to Answer Question(s)