A nation that devotes more of its resources to the production of capital goods rather than consumer goods is likely to
A) cause its production possibilities curve to shift outward.
B) cause its production possibilities curve to shift inward.
C) increase the slope of its production possibilities curve.
D) decrease the slope of its production possibilities curve.

Question

Quizplus · Accepted Answer

Devoting more resources to the production of capital goods, such as factories and equipment, will lead to an increase in the production capacity of the economy over time. This is because capital goods are used to produce other goods and services, which can lead to greater output in the long run. As a result, the production possibilities curve of the economy is likely to shift outwards.

A Nation That Devotes More of Its Resources to the Production