If the economy is currently operating on a point on the production possibility curve for government goods and services versus private goods and services,

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The production possibility curve (PPC) represents the maximum output combinations of two goods that an economy can achieve with its current resources and technology. Operating on the PPC means the economy is efficiently using all its resources. To increase the production of one good (government goods and services), resources must be reallocated from the other (private goods and services), and vice versa. Therefore, a decrease in government goods and services would free up resources that could be used to increase the production of private goods and services.

If the Economy Is Currently Operating on a Point on the Production