Compare Two Economies a and B That Start Out with Identical

question 86

Multiple Choice

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:

• A) economy A will operate inefficiently.
• B) economy B will operate inefficiently.
• C) economy A and economy B will grow equally fast.
• D) economy A will grow faster than economy B.
• E) economy B will grow faster than economy A.

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