A Nation's Production Possibilities Frontier Is Bowed Outward

question 81

Multiple Choice

A nation's production possibilities frontier is bowed outward. Suppose that the government decides to increase the production of armaments by $20 billion, and that as a result the output of consumer goods falls by $20 billion. If a further $20 billion increase beyond the initial $20 billion increase in armaments output is sought, we can expect that the output of consumer goods and services will fall further by

• A) more than $20 billion.
• B) less than $20 billion.
• C) $20 billion.
• D) There is not enough information to determine the answer.

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