A country that must reduce current consumption if it wished to increase future consumption possibilities

Question

Quizplus · Accepted Answer

A country that must reduce current consumption if it wants to increase future consumption possibilities is already producing at its maximum potential, meaning it is on its production possibilities curve. This situation implies that the resources are fully employed, and any increase in current consumption will lead to a reduction in the production of capital goods, which will limit future consumption possibilities. Therefore, the only option is to reduce current consumption to allocate more resources towards capital goods and increase future consumption possibilities.

A Country That Must Reduce Current Consumption If It Wished