Is increased capital spending the only way for an economy to expand its production possibilities curve?
a. No, an economy can also expand by invention and innovation.
b. No, an economy can also grow by reallocating more resources toward the production of consumption goods.
c. Yes, more capital investment is the only way to expand production possibilities.
d. Yes, although increased production of capital clearly increases the opportunity cost.
Question 2
If net exports are negative, then aggregate demand will be less than the sum of consumption, investment, and government purchases.
a. True
b. False
Indicate whether the statement is true or false
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