Map Sapling Learning Snowdonia is a small c which produces wrought iron and chee

Question

Map Sapling Learning Snowdonia is a small c which produces wrought iron and cheesecakes e fixed capacity growth in year 1. Wnat part of tne busintessbycle is Snowdonia in? and s e O peak trough recession recovery Fixed capacity growth is demonstrated on the graph to the left as a movement from point Select answer to point Select answer n growth in Snowdonia would be illustrated on the graph as a movement from point Select answer to point Select answer PPF Year 1 wrought iron Previous Check Answer Next Exit Hint

Explanation / Answer

(1) Recovery

In Recovery phase of business cycle, capacity growth takes place due to increase in output, as businesses recover from the recession.

(2) Capacity growth is demonstrated as movement from point C to point A.

Reason: During recession, resources are underutilized and the economy will operate inside the PPF at point C. Capacity growth leads to higher utilization of resources and economy moves to an efficient point on the PPF, i.e. point A.

(3) Long run growth is demonstrated as movement from point A to point B.

Reason: Long run growth shifts the PPF outward, so economy is able to operate at higher PPF (at point B).

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