Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future
A) Alpha will experience greater economic growth than Beta.
B) Beta will experience greater economic growth than Alpha.
C) Alpha will not be able to achieve full employment or productive efficiency.
D) Beta will not be able to achieve full employment or productive efficiency.

Question

Quizplus · Accepted Answer

By devoting more resources to capital goods, Beta will be able to increase its future production possibilities and therefore experience greater economic growth than Alpha. This is because capital goods are used to produce consumer goods in the future, leading to a higher level of economic growth. As long as Beta is able to use its additional capital goods efficiently, it will be able to achieve full employment and productive efficiency. Alpha may also experience economic growth, but not to the same extent as Beta due to its lower investment in capital goods.

Suppose There Are Two Economies, Alpha and Beta, Which Have