Using Figure 1.5,if an economy is currently producing on PP2,which of the following would shift the production possibilities curve toward PP1?
A)An increase in the quantity of labor available.
B)A decrease in the amount of capital available.
C)A decrease in the level of unemployment towards the normal level.
D)An advancement in technology.

Question

Using Figure 1.5,if an economy is currently producing on PP2,which of the following would shift the production possibilities curve toward PP1?
A)An increase in the quantity of labor available. 
B)A decrease in the amount of capital available. 
C)A decrease in the level of unemployment towards the normal level. 
D)An advancement in technology.

Quizplus · Accepted Answer

A decrease in the amount of capital available would shift the production possibilities curve towards PP1 as it would reduce the economy's potential to produce goods and services. The other choices would either result in movement along the production possibilities curve or a shift towards a higher curve.