Refer to the accompanying graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by which of the following factors?
A) a decrease in the price level
B) allocative eﬃciency
C) technological progress
D) full employment of resources

Question

Refer to the accompanying graph. If the production possibilities curve of an economy shifts from AB to CD, it is most likely caused by which of the following factors?
A) a decrease in the price level 
B) allocative eﬃciency 
C) technological progress 
D) full employment of resources

Quizplus · Accepted Answer

Technological progress can shift the production possibilities curve outward, allowing an economy to produce more of both goods. A decrease in the price level, allocative efficiency, or full employment of resources do not directly cause a shift in the production possibilities curve.

Refer to the Accompanying Graph