📚 Learning Guide
Economic Growth and Resource Allocation
easy

Reallocating resources from consumer goods to capital goods will always lead to immediate increases in economic growth.

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A

True

B

False

Understanding the Answer

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Answer

Reallocating resources from consumer goods to capital goods can lead to economic growth, but it doesn’t always result in immediate increases. Consumer goods, like food and clothing, satisfy people's current needs, while capital goods, like machines and tools, help produce more goods in the future. When resources are shifted to create more capital goods, it may take time for the economy to see the benefits, as new machines need to be built and used before they can increase production. For example, if a factory decides to spend its money on new equipment instead of new products, it might not see an immediate boost in sales, but over time, the new equipment can help produce more goods efficiently. Therefore, while this reallocation can lead to growth, the effects are often not instant and require patience and planning.

Detailed Explanation

Shifting resources to capital goods can take time to show benefits. Other options are incorrect because Some might think that moving resources will always boost growth right away.

Key Concepts

Resource Allocation
Economic Growth
Capital Formation
Topic

Economic Growth and Resource Allocation

Difficulty

easy level question

Cognitive Level

understand

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