Question

The government has started promoting foreign capital. What is its economic value in the context of Production Possibilities Frontier?

Answer 1

When the government promotes foreign capital, there is an increase in the flow of money into the country. This, in turn, increases the availability of resources to a great extent which leads to an increase in the country’s production potential. So, there is a rise in economic value which leads to a shift in the production possibility curve (PPC) to the right

Answer 2

It will increase inflow of foreign capital. Its economic value is the rise in production potential due to increase in resources.