Refer to Figure 10.2 for the following questions.
Figure 10.2

-In Figure 10.2, given the economy is at point A in year 1 and point B in year 2, what will happen to the unemployment rate in year 2?
A)It will rise.
B)It will fall.
C)It will remain constant.
D)There is not enough information to answer the question.

Question

Refer to Figure 10.2 for the following questions.
Figure 10.2
 
-In Figure 10.2, given the economy is at point A in year 1 and point B in year 2, what will happen to the unemployment rate in year 2?
A)It will rise. 
B)It will fall. 
C)It will remain constant. 
D)There is not enough information to answer the question.

Quizplus · Accepted Answer

Point B is on the production possibilities frontier (PPF), which means the economy has reduced unemployment from year 1. As the economy moves toward full employment, the opportunity cost of producing additional goods and services increases, leading to diminishing marginal returns. This increase in opportunity cost will lead to an increase in the unemployment rate in year 2.

Refer to Figure 10.2 for the Following Questions