A country that must reduce current consumption to increase future consumption possibilities
A) must be allocating resources inefficiently.
B) must be producing along the production possibilities curve.
C) must be producing outside the production possibilities curve.
D) must not have private ownership of property.

Question

Quizplus · Accepted Answer

Production possibilities curve represents the maximum combination of two goods that can be produced with a given set of resources and technology. Producing inside the curve indicates inefficiency, while producing outside the curve is not possible with the given resources and technology. Therefore, reducing current consumption to increase future consumption possibilities indicates that the country is currently producing along the production possibilities curve but needs to shift it outwards, which can only be achieved by investing in capital goods, technology, or education.

A Country That Must Reduce Current Consumption to Increase Future