Question

Suppose a nation experienced an increase in the level of unemployment. What would be the effect on the nation's production possibilities curve

Answer 1

Answer:

a. The curve would not shift, the change in unemployment would be represented by moving from a point inside the curve toward the curve

Explanation:

Options are : "a. The curve would not shift, the change in unemployment would be represented by moving from a point inside the curve toward the curve, b. The curve would shift to the left, c. The curve would not shift, the change in unemployment would be represented by moving from a point on the curve to a point outside the curve. d. The curve would shift to the right."

Reduction in unemployment means that the resources are being well utilized , the ideal resources in the economy is being used , so the economy moves from an inefficient point to an efficient one. The change in unemployment will be represented by moving from a point from a point to a curve inside the point. So the nation's production possibilities curve would not shift