With the disappearance of the former Soviet Union and the end of the Cold War, the United States...

Question

With the disappearance of the former Soviet Union and the end of the  Cold War, the United States became the world’s only superpower and no  longer engaged in an intense competition to build up its military. As a  result, in the 1990s Congress and the White House had the opportunity to  reduce the military’s share of the budget and spend more funds for  nondefense goods. This situation was referred to as the “peace  dividend.” Now consider that the need to combat terrorism diverts  resources back to military and security output. Does the peace  dividend or a reversal to more military spending represent a possible  shift of the production possibilities curve or a movement along it?

Robert · Accepted Answer

Production possibility frontier (PPF) is a curve represents various combinations of two outputs 
that can be produced by fully utilizing available resources. All points on the curve are efficient 
point and nay point inside the curve is inefficient point of production.

With the disappearance of the former Soviet Union and the end of the Cold War, the United States became the world’s only superpower and no longer engaged in an intense competition to build up its...

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