Suppose the economy whose PPF is shown on the right experiences economic growth.

Question

Suppose the economy whose PPF is shown on the right experiences economic growth. Production Possibilities 1.) Use the 3-point curved line drawing tool to show how growth affects the trade-offs the country faces between producing ships and food. 2.) Use the point drawing tool to draw and label a point on the new PPF that shows the economy producing more of both goods. Label this point 'B' Carefully follow the instructions above and only draw the required objects. Which of the following may have caused the shift you have drawn? (Check all that apply.) A. An increase in the capital stock. B. The achievement of full employment. C. Advances in technology. D. A larger labor force. E. Balanced production between ships and food 0 Food

Explanation / Answer

Rightward shift in PPF signifies the larger output of both items. Advances in technology increases productivities of labor and capital which pushes PPF outputwards. Increase in capital stock and labor forces also affect the production possibilitiy Frontier.

Hence, Right answer are: (A), (C) and (D)

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