Question

In a certain economy, jam and bread are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more jam and more bread, relative to the quantities of those goods that are being produced now?
a. Unemployed labor is put to work producing jam and bread.
b. The economy puts its idle capital to work producing jam and bread.
c. The economy experiences economic growth.
d. All of the above are correct.

Answer 1

Answer:

C. The economy experiences economic growth.

Explanation:

When the economy is already working on the production possibility frontier the economic agents are already employed and working on full optimization.

In case of economic growth the production possibility frontier shifts upward and results in producing more jam and bread.