China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults."
Www)nytimes.com, Keith Bradsher, October 19, 2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, China's PPF will
A) shift outward.
B) shift inward.
C) rotate outward.
D) become flatter.

Question

Quizplus · Accepted Answer

By encouraging more spending on infrastructure and vocational training, China is investing in capital goods and improving human capital. This will shift the PPF outward, indicating an increase in the potential for production of both consumption and capital goods.

China's State Council Has Encouraged More Spending to "Improve Transportation