Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?
A) An increase in the quantity of labor available.
B) A decrease in the amount of capital available.
C) An increase in the level of unemployment above the normal level.
D) An advancement in technology.

Question

Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?
A) An increase in the quantity of labor available. 
B) A decrease in the amount of capital available. 
C) An increase in the level of unemployment above the normal level. 
D) An advancement in technology.

Quizplus · Accepted Answer

A decrease in the amount of capital available would shift the production possibilities curve towards PP1 because it would limit the resources available for production, causing a reduction in the economy's overall output.