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There are two ways that the US could have both more guns and more butter.
First, as the hint in the question says, we should think about where the US might have been on the production possibilities curve (PPC). It might have been at a point inside the curve, meaning that its economy was not producing at maximum efficiency. By boosting efficiency in some way, the US could have had economic growth and more of both guns and butter.
Second, the US might have been on the line of the PPC, meaning it was producing at maximum efficiency. In that case, the US would have needed to add resources in order to get more guns and butter. One way to do that would have been to improve its technology or the level of productivity of its workers.
So, there were two ways the US could have had more guns and butter, depending on where it was on the PPC at the time.
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