Take Test: Te Status: QUESTION 13 The figure given below shows the production po

Question

Take Test: Te Status: QUESTION 13 The figure given below shows the production possibilities frontier for capital goods and consumption goods Identify the correct statement Oa If the economy is initially at point a, an improvement in the rules of the game will lead to a movement to point c. b. Economic growth will allow the economy to produce at a point that lies on a lower production possibilities frontier. c. Economic growth will allow the economy to produce at a point that lies on a higher production possibilities frontier od. If the economy is initially at point c, an increase in capital stock will lead to a movement to point b. e If the economy is initially at point b, an increase in capital stock will lead to a movement to pointc

Explanation / Answer

Answer.) Economic growth will allow the economy to produce at that point that lies on a higher production possibility Frontier.

Economic growth is associated with shifting PFC at higher levels so that with given inputs more units of the goods could be produced.

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