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

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Question restatement: The process of using current resources to create new capital is being asked about.
Option a: 'the PPF'—The production possibilities frontier represents the maximum feasible combinations of goods that can be produced with current resources and technology. It is a graphical boundary, not a process of creating new capital. Therefore, this option does not describe using resources to build capital.
Option b: 'gains from trade'—Gains from trade refer to the benefits that parties receive by specializing and exchanging goods. While trade can influence resource allocation and growth, it is not the mechanism described by turning current resources into new capital. Thus, this is not the correct description.
Option c: 'inefficient when it occurs on the production possibilities frontier (PPF)'—The PPF is a boundary; moving along it reflects different production choices given resources. Describing investment as 'inefficient on the PPF' is conceptually odd; investment can be efficient or inefficient depending on allocation, but the statement itself misframes investment as inherently tied to inefficiency on the PPF. Therefore, this option is incorrect.
Option d: 'investment'—Investment is precisely the process of using current resources (such as funds, labor, and capital goods) to create new capital goods (like machinery, buildings, or software) that will yield future production capacity. This aligns with the economic definition of transforming current resources into productive capital, supporting growth. Therefore, this option correctly captures the concept.
In summary, option d best matches the idea of converting existing resources into new capital, while options a, b, and c describe different concepts or misinterpret the relationship between resources, capital creation, and production possibilities.

MCD2020 - T1 - 2025 Homework Quiz 1 - Foundations of Economics and Gains from Trade

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

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