8. Economic growthThe following graph shows the production possibilities curve (also known as the productionpossibilities frontier) of an economy that produces cars and computers. Suppose that a rise in thiseconomy's saving rate allows for investment in modern, efficient manufacturing plants.Adjust the production possibilities curve (PPC) to show the economy's new production possibilitiesafter the rise in the saving rate.Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one orboth endpoints to the desired position. Points will snap into position, so if you try to move a pointand it snaps back to its original position, just drag it a little farther.QUANTITY OF CARS (Mor)24PPC510QUANTITY OF COMPUTERS (Mor)15Suppose society faces a broad tradeoff between allocating resources to the production ofinvestment goods (computers) and consumption goods (cars) before the rise in the saving ratedescribed above.Which of the following events would be most likely to lead to the rise in the saving rate you justillustrated?Increasing production of investment and consumption goodsDecreasing production of investment and consumption goodsDecreasing production of investment goods and increasing production of consumptiongoodsIncreasing production of investment goods and decreasing production of consumptiongoods

The production possibility curve represents the most efficient bundles of…

Which of the following events would be most likely to lead to the rise in the saving rate you just illustrated? Increasing production of investment and consumption goods Decreasing production of investment and consumption goods Decreasing production of investment goods and increasing production of consumption goods • Increasing production of investment goods and decreasing production of consumption goods

Which of the following events would be most likely to lead to the rise in the saving rate you just illustrated? Increasing production of investment and consumption goods Decreasing production of investment and consumption goods Decreasing production of investment goods and increasing production of consumption goods • Increasing production of investment goods and decreasing production of consumption goods

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.

Question

8. Economic growth
The following graph shows the production possibilities curve (also known as the production
possibilities frontier) of an economy that produces cars and computers. Suppose that a rise in this
economy's saving rate allows for investment in modern, efficient manufacturing plants.
Adjust the production possibilities curve (PPC) to show the economy's new production possibilities
after the rise in the saving rate.
Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or
both endpoints to the desired position. Points will snap into position, so if you try to move a point
and it snaps back to its original position, just drag it a little farther.
QUANTITY OF CARS (Mor)
24
PPC
5
10
QUANTITY OF COMPUTERS (Mor)
15
Suppose society faces a broad tradeoff between allocating resources to the production of
investment goods (computers) and consumption goods (cars) before the rise in the saving rate
described above.
Which of the following events would be most likely to lead to the rise in the saving rate you just
illustrated?
Increasing production of investment and consumption goods
Decreasing production of investment and consumption goods
Decreasing production of investment goods and increasing production of consumption
goods
Increasing production of investment goods and decreasing production of consumption
goods

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