Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It reduces overall production capacity by focusing on fewer goods.
B
It increases productivity by enhancing capital formation.
C
It leads to immediate consumer satisfaction but stifles future growth.
D
It has no significant impact on economic growth.
Understanding the Answer
Let's break down why this is correct
Answer
Reallocating resources from consumer goods to capital goods can boost long-term economic growth because capital goods help create more products and services in the future. When a country invests in things like machinery, factories, or technology, it improves its ability to produce goods efficiently. For example, if a company decides to use its money to buy new machines instead of making more toys, those machines can help create a wider range of products over time. This means that in the long run, the economy can grow because it can produce more, leading to higher profits and more jobs. Ultimately, this shift helps build a stronger economy that benefits everyone.
Detailed Explanation
When we invest in capital goods, like machines and buildings, we can produce more in the future. Other options are incorrect because Some might think that focusing on fewer goods means less overall production; It's a common belief that focusing on capital goods might make people unhappy now.
Key Concepts
Resource Allocation
Economic Growth
Capital Formation
Topic
Economic Growth and Resource Allocation
Difficulty
hard level question
Cognitive Level
understand
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