Question

Increases in the capital stock or improvements in technology may cause

both an outward shift in the frontier and a change in the overall slope of the Production Possibilities Frontier, if the change more greatly improves one type of production than the other.

a movement along the frontier but not a shift of the frontier if only one type of production is favored.

a movement to a point inside the Production Possibilities Frontier.

only a parallel shift inward of the Production Possibilities Frontier.

only a parallel shift outward of the Production Possibilities Frontier.

Choosing to produce more capital goods today allows an economy to

avoid opportunity costs with its production decisions in the present.

maintain full employment today at the cost of economic growth in the future.

shift its Production Possibilities Frontier outward at a more rapid pace.

shift its Production Possibilities Frontier inward.

curb inflation by slowing economic growth.

Answer 1

Question 1. option 1. both an outward shift in the frontier and a change in the overall slope of the Production Possibilities Frontier if the change more greatly improve one type of production than the other.

Explanation: Increase in the capital stock or improvement in technology would increase the overall production capacity of the economy. This will result in an outward shift in the production possibility curve. Also, the slope of the curve might change depending on whether the change improves production of all goods by the same degree or by different degrees.

Question 2. Option 3. shift its Production Possibilities Frontier outward at a more rapid pace.

Explanation: More capital goods increases the overall production capacity, which causes a rightward shift in the production possibility curve. In addition, production of more capital goods at present makes it possible to produce even more capital goods in the future. So, the PPF shifts outward at a more rapid speed.