lectur12-page38

lectur12-page38 - Consumer goods and services will be...

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38 Point A: The economy has lots of consumer goods and little capital goods. The emphasis is on the short run and not on the long run. A large shift in the $Ag vs. $ Non-Ag production possibilities curve would not be expected. In this case, the economy will have more Consumer good consumption now than at point B, but future Consumer good consumption will be less. Point A will make a lot of people happy in the short run.
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Unformatted text preview: Consumer goods and services will be plentiful and relatively cheap. WalMart and Kmart shoppers are elated. But, down the road, the quantity of consumer goods and services will start to decrease and their price increase as the economy starts to contract as capital wears out and is not replaced....
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