Question

During the Great Depression, the gross domestic product in the United States fell 30 percent. What do you think happened to the production possibilities frontier?

Answer 1

Answer:

The production possibilities frontier shifted inward.

Explanation:

Production possibilities frontier also called production possibilities curve

is based on the assumptions that the available resources in an economy can produce only two commodities, it depicts the number of commodity B the society can forgo in order to produce commodity B, given the available resources.

During the war the productive base of United States was affected negatively as some of the production inputs were destroyed and this reduced the GDP by 30%. Some of the factors that can shift the production possibilities curve inward is natural disaster, war, unemployment and limited money supply.