If two economies start with the same production-possibility frontier between capital goods and consumer goods, then the one whose beginning point represents a smaller fraction of consumer goods will probably, in the next period, have a production-possibility frontier located farther from the origin.

Question

Quizplus · Accepted Answer

A smaller fraction of consumer goods in the beginning point indicates a higher investment in capital goods, which is expected to increase productivity and increase the production-possibility frontier in the next period.

If Two Economies Start with the Same Production-Possibility Frontier Between