Question
How is a nation's production possibilities curve affected in the long run by a boom in both new and existing housing sales in the present?
How is a nation's production possibilities curve affected in the long run by a boom in both new and existing housing sales in the present?
a. Since housing is not productive capital, there is no impact on the nation's production possibilities curve.
b. Housing consumption increases worker productivity, causing a move up along the production possibilities curve.
c. Increased housing production in the present means fewer other goods and services, including capital, are produced. The rate of economic growth is lower than it would have been otherwise, causing the production possibilities curve to shift outward by a smaller amount.
d. The production possibilities curve will initially shift inward, but will eventually shift outward as labor productivity increases.
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