5. This production possibility curve shows the tradeoff between consumer goods and capital goods. Since capital goods

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5. This production possibility curve shows the tradeoff between consumer goods and capital goods.

Since capital goods are a resource, an increase in the production of capital goods today will increase the economy’s production possibilities in the future.

Therefore, all other things being equal, producing at which point today will result in the largest outward shift of the PPF in the future?

a. A

b. B

c. C

d. D

e. E

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Macroeconomics In Modules

ISBN: 978-1464139055

3rd Edition

Authors: Paul Krugman ,Robin Wells

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