Suppose that country A produces mostly consumption goods and few investment goods, while country B produces mostly investment goods with few consumption goods. Other things constant, which of the following is most likely to happen in the future?
A) The per capita income of country A will grow more rapidly than country B.
B) The population of country B will grow more rapidly than country A.
C) The production possibilities curve (PPC) of country B will shift out more rapidly than the PPC of country A.
D) The production possibilities curve (PPC) of country A will shift out more rapidly than the PPC of country B.

Question

Quizplus · Accepted Answer

Country B, which focuses on investment goods, is likely to experience more rapid economic growth as investment goods contribute to capital accumulation, leading to an outward shift in the production possibilities curve.

Suppose That Country a Produces Mostly Consumption Goods and Few