Technological improvements will:
A)leave the production possibility frontier unchanged.
B)shift the production possibility frontier inward.
C)shift the production possibility frontier outward.
D)necessarily lead to increased unemployment.

Question

Quizplus · Accepted Answer

Technological improvements enable firms to produce more output with the same inputs or to produce output with fewer inputs. Thus, the economy's production capacity increases, leading to a shift in the production possibility frontier outward. This means that the economy can now produce more goods and services than before, leading to potential economic growth. It does not necessarily lead to increased unemployment as firms may hire more workers to produce the additional output generated by technological improvements.

Technological Improvements Will