Question

Unemployment would cause an economy to Group of answer choices produce outside its production possibilities frontier. produce inside its production possibilities frontier. produce on its production possibilities frontier. experience an inward shift of its production possibilities frontier.?

Answer 1

Answer:

The correct answer is: produce inside its production possibilities frontier.

Explanation:

The production possibility frontier shows the maximum possible combination of two goods that an economy can produce using all the available resources and state of technology.

Unemployment in an economy means that all the available resources are not being completely used. So, the economy will operate at a point inside the production possibility curve.

Production at this point will be feasible but allocatively inefficient.