Assume a nation's current production possibilities are represented by the curve AB in the accompanying diagram. Economic growth would best be indicated by a

Question

Quizplus · Accepted Answer

Economic growth is best indicated by a shift in the production possibilities curve. Choice A shows a shift from AB to CD, indicating an increase in the production capacity of the economy, as more goods and services can be produced at all levels of the economy. Movement from point 1 to point 2 or from point 3 to point 4 only shows an increase in the production of a specific good or service, not an increase in the overall production capacity of the economy. Shift from AB to EF indicates a decrease in the production capacity of the economy.

Assume a Nation's Current Production Possibilities Are Represented by the Curve