I.The future of economic growth is in education,” claims arecent article in the New York Review of B

I.The future of economic growth is in education,” claims arecent article in the New York Review of Books. Let us use ourmodel of PPF to analyze this statement. Assume that the USA canproduce two goods: Software and Education, and has the typicalcurved shape. a. Draw the PPF with Education on the X-axis. b. What is the interpretation of the slope of the PPF you drewin part 1? Why does a curve make sense when describing a country asa whole? c. Add to your graph a point that corresponds to full employmentand where the US consumes both software and Education. Label thisas point A. d. Add another point on your PPF that corresponds to producingmore Education than at point A. Label this as point B. e. Now suppose that Education, but not Software, increases theability to produce software the NEXT period but does not impact theability to produce education. Draw a PPF that corresponds to theoriginal production at point A. Then do this for point B. Labelclearly which PPF is which, and explain. f. The Secretary of Education claims that this proves that B isallocatively efficient while A is not. Is he correct? Explain. . . .

 

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