Refer to Figure 34.1.Suppose the production possibilities curve PP₂ represents the goods and services produced in the U.S.economy.If welfare discourages people from seeking work,and laws change so that more people receive welfare benefits,the most likely result would be

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If welfare discourages people from seeking work and more people receive welfare benefits, then there will be a decrease in the labor force and a decrease in the production of goods and services. This will result in a shift inward of the PP₂ production possibilities curve, from PP₂ to PP₁. This shift represents a decrease in the maximum amount of goods and services that can be produced in the economy.