Choose the letter of the diagram in Figure 16.1 that illustrates the effects of supply-side policies designed to increase the capacity of the economy.
A)a.
B)b.
C)c.
D)d.

Question

Choose the letter of the diagram in Figure 16.1 that illustrates the effects of supply-side policies designed to increase the capacity of the economy.
A)a. 
B)b. 
C)c. 
D)d.

Quizplus · Accepted Answer

Diagram b shows an outward shift of the production possibilities frontier (PPF) which represents an increase in the productive capacity of the economy. This could be achieved through supply-side policies such as investment in capital, infrastructure, and education that lead to an increase in the quantity and quality of resources available for production.

Choose the Letter of the Diagram in Figure 16