Final answer:
None of the options directly increase the production possibilities frontier. Instead, capacity can be expanded by improvements in efficiency, growth of resources, or technological advancements that allow for more output with the same level of inputs.
Step-by-step explanation:
If the economy is on the production possibilities frontier (PPF), it is utilizing all its resources efficiently, producing the maximum output of goods and services given the resources available. An increase in an economy's capacity can be driven by a few factors. One factor is technological advancement, which allows more efficient production and thus shifts the PPF outward. Another way the capacity can increase is through the growth of resources, such as an increase in labor or capital. Additionally, improved efficiency in using existing resources can lead to an optimization of the production process without the need for additional inputs.
Looking at the answer choices provided in the question, increasing government spending could potentially lead to an increase in the overall demand for goods and services, stimulating production. However, this would not necessarily increase the economy's 'capacity' unless it is focused on aspects like infrastructure, education, or technology that can enhance production capabilities. Therefore, none of the options provided directly relate to increasing the PPF, as they mostly deal with distribution and not the capability of production.