Referring to a production possibilities curve and the goods being compared,depict the economic event.The economy moves from full employment to a serious recession (capital goods vs.consumer goods).
A)A movement from a point inside the curve to a point on or near the curve
B)A movement from a point on or near the curve to a point inside the curve
C)A shift in the entire curve to the right (outward)
D)A shift in the entire curve to the left (inward)
E)A movement along the curve

Question

Quizplus · Accepted Answer

A movement from a point on or near the curve to a point inside the curve represents a decrease in production due to a recession. The fact that it is a recession suggests a decrease in consumer demand, which leads to a decrease in the production of consumer goods. However, the production of capital goods may remain the same or decrease at a slower pace than consumer goods, leading to a shift from the frontier of the curve (full employment) to a point inside the curve (recession).

Referring to a Production Possibilities Curve and the Goods Being