One application of the production possibilities concept has been to explain the difference in growth patterns of a nation with a high level of investment (Alta) and an equivalent nation with a low level of investment (Zorn). Use the concept to explain
why Alta’s economic growth would be greater than that of Zorn over time.
Please provide the best answer for the statement.
The application suggests the trade off illustrated by a production possibilities curve with consumption spending on one axis and investment spending on the other axis. In Alta the combination of consumption and investment spending is heavily weighted toward investment. In Zorn investment spending is a smaller percentage of domestic output. If investment were measured on the vertical axis and consumption on the horizontal axis, Alta’s optimal selection would be much higher on its production possibilities curve than would be the selection in Zorn. As a result of this larger proportion of income spent on investment goods, Alta’s capital resource base and its economy grow more rapidly, which means its production possibilities curve shifts outward at a more rapid pace over time.
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Refer to Table 14-4. Does Alistair have a dominant strategy and if so, what is it?
A) There are two dominant strategies: if Baine increases its advertising budget, then Alistair's best bet is to keep its budget the same but if Baine does not increase its budget then Alistair should raise its advertising budget. B) Yes, Alistair should increase its advertising budget. C) Yes, Alistair should keep its advertising budget as is. D) No, there is no dominant strategy.
Is internally held public debt or externally held public debt less likely to be a problem? Explain