Is increased capital spending the only way for an economy to expand its production possibilities frontier?
A)No, an economy can also expand by invention and innovation.
B)No, an economy can also grow by investment instead of capital spending.
C)Yes, more capital is the only way to expand its production possibilities frontier.
D)Yes, although more capital clearly has a high opportunity cost.
E)Yes, because capital is the only constraining resource that limits growth.

Question

Quizplus · Accepted Answer

An economy can expand its production possibilities frontier not only by increasing capital spending but also by innovation and invention. New technology and ideas can lead to improved production processes, which can increase output and shift the production possibilities frontier outward. In this way, an economy can achieve growth without necessarily having to invest in new capital.

Is Increased Capital Spending the Only Way for an Economy