more capital), the economy grows. As it does, the production possibilities frontier for a society will tend to shift

outward and society will be able to afford more of all goods. In addition, over time, improvements in

technology can increase the level of production with given resources, and hence push out the PPF.

However, improvements in productive efficiency take time to discover and implement, and economic growth

happens only gradually. Thus, a society must choose between tradeoffs in the present. For government, this

process often involves trying to identify where additional spending could do the most good and where

reductions in spending would do the least harm. At the individual and firm level, the market economy

coordinates a process in which firms seek to produce goods and services in the quantity, quality, and price that

people want. However, for both the government and the market economy in the short term, increases in
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