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JAMB Economics 1997 Question 12

Question 12

Basic Concepts

Use the diagram to answer the question. The current stage of the economy is depicted in curve I.
The movement of curve I to II suggests

Diagram for this question
  1. A.an improvement in capital goods technology but not in consumer goods technology
  2. B.a movement from unemployment to full employment
  3. C.that the output for the society has declined
  4. D.a gain in consumer goods technique and not in capital goods technique.
Show the answer and explanation

Answer: A (an improvement in capital goods technology but not in consumer goods technology)

Explanation

Curve II starts at the same point on the consumer goods axis but reaches further along the capital goods axis, so only the capacity to produce capital goods has improved.