Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:

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Economy B has chosen a point with more investment in capital goods, indicating a focus on long-term growth and productivity. This suggests that over time, economy B will experience faster growth than economy A, which has prioritized immediate consumption over investment in the future.

Compare Two Economies a and B That Start Out with Identical