When considering an economy producing only two goods, economic growth can be illustrated by:
A) a movement along its production possibilities frontier.
B) a movement of its production possibilities frontier toward the origin.
C) moving to a point beneath its production possibilities frontier.
D) an outward shift of its production possibilities frontier.

Question

Quizplus · Accepted Answer

An outward shift of the production possibilities frontier (PPF) indicates that an economy has increased its capacity to produce goods and services, representing economic growth. This is because the PPF shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized, so moving outward means more of both goods can be produced than before.

When Considering an Economy Producing Only Two Goods, Economic Growth