When more resources in an economy are devoted to the production of capital goods:
A)the production possibilities curve shifts inward.
B)the production possibilities curve in the current period shifts inward, but shifts outward in the future.
C)the production possibilities curve shifts outward next in the future.
D)the production possibilities curve is unchanged from period to period.

Question

When more resources in an economy are devoted to the production of capital goods:
A)​the production possibilities curve shifts inward.
B)​the production possibilities curve in the current period shifts inward, but shifts outward in the future.
C)​the production possibilities curve shifts outward next in the future.
D)​the production possibilities curve is unchanged from period to period.

Quizplus · Accepted Answer

When more resources are devoted to the production of capital goods, this investment leads to an increase in future production possibilities. Therefore, the production possibilities curve shifts outward in the future.

When More Resources in an Economy Are Devoted to the Production