Answer to Question #260666 in Macroeconomics for Dhanu

Question

2.Which of the following will bring about an inward shift of the production possibility curve?

Select one:

a. An increase in the level of unemployment.

b. An increase in the allocation of resources to the production of capital goods.

c. A decrease in the demand for goods and services.

d. An increase in the number of skilled people emigrating.

e. A, B and C could all be associated with an inward shift of the ppc.

Answer 1

a. An increase in the level of unemployment.

This implies that the labor force in the economy is declining and many people are not working, hence they are not productive. This results in a decrease in output of the economy and thus the production possibility curve shifts inwards.