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 chooses an efficient point with 4 consumption goods and 5 capital goods.In the future we can predict:

Question

Quizplus · Accepted Answer

Economy B has chosen to produce more capital goods, which will result in a higher rate of economic growth in the future. This means that economy B will grow faster than economy A, even though they started with identical production possibilities curves. Therefore, choice E is correct. Choices A, B, C, and D are all incorrect as they do not accurately reflect the outcome of the different choices made by the two economies.

Compare Two Economies a and B That Start Out with Identical