Refer to Figure 34.1.Suppose the production possibilities curve PP₂ represents the U.S.economy and point C represents the combination of goods and services currently being produced.If welfare discourages people from seeking work and welfare is currently in effect,the most likely result of eliminating welfare in the United States would be

Question

Quizplus · Accepted Answer

Eliminating welfare would remove the disincentive to work and encourage people to seek employment. This would increase the labor force and shift the economy from point C to a point on the production possibilities curve PP₂, where more goods and services can be produced. There would be no shift in the curve itself since removing welfare would not affect the economy's capacity for production.