Question

An economy which uses all its resources on production of _____________ , cannot provide for future growth prospects.

• A. capital goods only
• B. consumer goods only
• C. Both (a) and (b)
• D. Neither (a) nor (b)

Answer 1

Answer: (B)

consumer goods only

An economy will require an optimal proportion of consumer and capital goods in order to be sustainable in the long run. If too much focus is put into producing consumer goods, the future consumption and growth will be limited as capital goods are required in the production of consumer goods. If too much focus is put into producing capital goods, the current consumption will be limited.