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