Asked by rufyjane stephen manuere on May 14, 2024
Verified
A decrease in the stock of capital will cause the
A) production possibility frontier to shift outward.
B) production possibility frontier to shift inward.
C) economy to move down the production possibility frontier.
D) economy to move closer to its production possibility frontier.
Production Possibility Frontier
A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology.
Capital
Refers to financial resources, machinery, and buildings used for producing goods and services.
- Determine the elements contributing to economic expansion and movements in the Production Possibility Frontier.
Verified Answer
TF
Tammy FournierMay 20, 2024
Final Answer :
B
Explanation :
A decrease in the stock of capital, which is a key factor of production, would reduce an economy's ability to produce goods and services. This would be represented by a shift of the production possibility frontier (PPF) inward, indicating a reduction in the maximum possible output of two goods or services that an economy can achieve when all its resources are fully and efficiently utilized.
Learning Objectives
- Determine the elements contributing to economic expansion and movements in the Production Possibility Frontier.
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