The process of using current resources to create new capital is:

Question

BlackTom AI · Accepted Answer

The question asks about the economic process described as using current resources to create new capital. 
Option a: 'inefficient when it occurs on the production possibilities frontier (PPF).' This statement mischaracterizes the concept. Using current resources to invest in capital can be efficient or uses up productive capacity, but the phrasing about inefficiency on the PPF is not a defining description of the process of creating capital. It confuses a potential outcome (efficiency) with the activity itself. 
Option b: 'the PPF.' The PPF is a graph that shows the maximum feasible production combinations of two goods given resources and technology, not the process of turning current resources into new capital. It is a tool for analyzing trade-offs, not the act of investing in capital. 
Option c: 'investment.' This option matches the economic concept: investing resources today to build or acquire capital (machinery, buildings, etc.) that will yield production in the future. It directly describes using resources to create new capital. 
Option d: 'gains from trade.' This refers to benefits arising from exchanging goods or services between agents or countries, not the act of converting resources into capital. It is unrelated to the definition of the process in question.

THC - MCD2020 - T3 - 2025 Homework Quiz 1 - Foundations of Economics and Gains from Trade

The process of using current resources to create new capital is:

View Explanation

Log in for full answers

Similar Questions

Which of the following is an example of Investment spending?