Question

what will be likely impact of large scale outflow of foreign capital on the PPC of the economy

Answer 1

Large-scale outflow of foreign capital from the economy will reduce resources and thus production potential of the country will fall. Fall in production potential, in turn, will shift the PPC downwards or PPC will shift to left.

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Answer 2

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Large scale flow of Foreign capital leads to greater flow of money in the economy. It will lead to increase in the availability of resources & production capacity .

Thus, ppc will shift to the rightward.

KnOw more :-

CASH IN FLOW

• It means that cash is going into the company.
• E.g : Receipt of a bank loan, Interest on savings and Investments and Shareholder investments etc

CASH OUT FLOW

• It means cash is going out of the company.
• E.g: Purchase of stock, Raw materials or tools, Wages, Rents and Daily operating expenses, Dividend payments, Income tax etc