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 a peace dividend or a reversal to more military spending represent a possible shift of the production possibilities curve (new curve) or a movement along it (going from one point to the other on the same curve)? Analyze why and support your analysis with a graph