An increase in national savings will have what effect in the long term on a country's PPF?
A)The PPF will be stationary.
B)The PPF will shift out.
C)The PPF will shift in.
D)The PPF will shift in then back out to its original position.
E)None of the above.

Question

Quizplus · Accepted Answer

An increase in national savings leads to a higher level of investment, which ultimately increases productivity, and therefore, the potential output of the economy as represented by the PPF. As a result, the PPF shifts outward, indicating that the economy has greater capacity to produce goods and services in the long run.

An Increase in National Savings Will Have What Effect in the Long