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6. Economic growth and PPCs PPC1 shows the current production possibilities curve (PPC) for the economy of Econoland, and PPU2 shows the PPC for Econoland

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6. Economic growth and PPCs PPC1 shows the current production possibilities curve (PPC) for the economy of Econoland, and PPU2 shows the PPC for Econoland next year if the economy were to operate at point A today. That is, investment choices today impact the growth of the economy in the future, and thus the PPC for next year. CAPITAL GOODS A PPC PPC CONSUMER GOODSSuppose that this year, the economy is operating at point A, but then a tornado destroys more capital than is being produced during the year. On the following graph, the PPC that best describes the Econoland economy next year is . (Note: PPC and PPC2 are the same as on the previous graph.) PPC, PPC1 CAPITAL GOODS PPC: PPC PPC, CONSUMER GOODS

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