When an economy is in a recession, where is it producing in relation to its production possibilities frontier?
A) on the curve near either axis
B) on the curve near its midpoint
C) outside the curve
D) inside the curve

Question

Quizplus · Accepted Answer

When an economy is in a recession, it is not utilizing all of its resources efficiently, which means it is producing inside its production possibilities frontier. This indicates underutilization of resources such as labor and capital.

When an Economy Is in a Recession, Where Is It