A production possibilities frontier can shift outward if
A)government increases the amount of money in the economy.
B)there is a technological improvement.
C)resources are shifted from the production of one good to the production of the other good.
D)the economy abandons inefficient production methods in favor of efficient production methods.

Question

Quizplus · Accepted Answer

A production possibilities frontier (PPF) represents the maximum combination of two goods that an economy can produce given its resources and technology. If there is a technological improvement, the economy can produce more of both goods, which shifts the PPF outward. Choices A, C, and D do not result in a shift of the PPF outward. Increasing the amount of money in the economy (Choice A) can lead to inflation but does not increase the economy's productive capacity. Shifting resources from the production of one good to another (Choice C) only results in a movement along the PPF. Abandoning inefficient production methods in favor of the efficient ones (Choice D) also provides for more efficient resource allocation, it only leads to a movement along the PPF limited by technology.

A Production Possibilities Frontier Can Shift Outward If