In general, if country A is accumulating capital at a faster rate than country B, then country A
A)will soon have a comparative advantage in the production of most goods.
B)is using a larger proportion of resources to produce consumption goods.
C)will have a production possibilities frontier that is shifting out faster than country B's.
D)will have a higher rate of inflation than country B.
E)will have more unemployment than country B.

Question

Quizplus · Accepted Answer

Accumulation of capital leads to economic growth, which in turn increases the production possibilities of a country. As a result, country A will experience a faster shift outwards of its production possibilities frontier than country B. This means that country A will have a higher potential to produce more goods and services than country B, giving it a comparative advantage in certain areas.

In General, If Country a Is Accumulating Capital at a Faster