Problem
Show the importance of savings to economic growth using a production possibilities frontier (PPF) where the two goods available are consumption goods and physical capital goods. Remember that any particular PPF represents a specific value of GDP at one point in time, with PPFs further out measuring higher levels of total GDP. Show how the choice of the mix of consumption and physical capital goods chosen by an economy at any one point in time affects the level of GDP over the future. What would happen to the PPF and total GDP in the future if all GDP produced now is consumed and none goes to physical capital goods?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.