A nation that devotes more of its resources to capital investment is likely to:
A) shift outward its production possibilities curve.
B) shift inward its production possibilities curve.
C) increase the slope of its production possibilities curve.
D) decrease the slope of its production possibilities curve.

Question

Quizplus · Accepted Answer

Capital investment refers to the production of machines, buildings, and infrastructure that can increase the productivity of the economy. By increasing its capital stock, a nation can produce more goods and services, leading to an outward shift of its production possibilities curve. This means that the economy can produce more output without having to sacrifice the production of other goods and services. Therefore, choice A is the best answer.

A Nation That Devotes More of Its Resources to Capital