Answer to Question #86927 in Macroeconomics for aisha woniewala

Question

2. If unemployment reduces in the economy, then what happens to the economy’s production in relation to the PPF?

Answer 1

Unemployment, as one of the factors that negatively affect the size of production in the economy, in relation to PPF means that unemployment eliminates production from optimal size and reduces its efficiency. Therefore, reducing unemployment in the economy will help increase production, and in relation to the PPF, this means that the economy will be more efficient and will approach its optimal volumes.