How does economic growth affect PPC?

Economic growth in the production possibilities curve (PPC) model. The production possibilities curve illustrates the maximum combination of output of two goods that an economy can produce, such as capital goods and consumption goods. If that curve shifts out, the capacity to produce has increased.

What will be the effect on PPC when unemployment is increased in the economy?

When there is unemployment, the maximum that an economy can produce does not change. So there is almost no effect on position of PP curve. The only thing is that economy produces somewhere below the curve. the PPC, the opportunity cost increases.

What would cause a PPC to increase?

Shifts in the production possibilities curve are caused by things that change the output of an economy, including advances in technology, changes in resources, more education or training (that’s what we call human capital) and changes in the labor force.

How PPC solve central problems of an economy?

PPC helps governments frame policies and decide on what kind of goods to be imported and what needs to be produced, therefore utilising the resources efficiently.

How does unemployment show up on PPC?

On a production possibility curve, unemployment will be highlighted as a point inside the curve. When unemployment occurs in the economy, it means that the human resources are not utilized to the maximum extent. This shows inefficiency. Any combination which is inefficient lies inside the production possibility curve.

What will be the effect on PPC of Bihar if better job opportunities are created in Bihar?

Generally, when the outcome of economy is increased, ppc will shift to the right. If better job opportunities are created in Bihar, then the output of the economy increases. So, the production possibilities curve shifts outward (i.e) towards the right.

What happens to PPC during recession?

When an economy is in a recession, it is operating inside the PPC. When it is at full employment, it operates on the PPC.

What happens when investment increases?

The initial increase in investment causes a rise in output and so people gain more income, which is then spent causing a further rise in AD. With a strong multiplier effect, there may be a bigger increase in AD in the long-term.

What is production possibility curve illustrate the central problem of what to produce using this curve?

Explanation: The production possibility curve (PPC) is a diagram that shows all the possible combinations of goods that an economy can produce within a specific time. It also shows the choices that an economy has in the use of its resources.

What will happen if unemployment increases?

When unemployment rates are high and steady, there are negative impacts on the long-run economic growth. Unemployment wastes resources, generates redistributive pressures and distortions, increases poverty, limits labor mobility, and promotes social unrest and conflict.