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Suppose that Country A and Country B currently (in 2011) have identical PPF's. However, Country A devotes only 5% of its resources to the production of capital goods, whereas Country B devotes 30% of its resources to the production of capital goods. Which country is likely to experience more rapid economic growth in the future? If you were to draw the two nations' PPF's on the same graph, which would be farther to the right? (i.e., which country's PPF would lie farther out from the origin)?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M972999

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