An increase in unemployment will cause this year's production possibilities curve to shift inward toward the origin.

Question

Quizplus · Accepted Answer

The production possibilities curve represents the maximum output possibilities for two goods or services, given a set of inputs including labor, technology, and resources. An increase in unemployment primarily affects the current utilization of resources rather than the economy's overall capacity or the curve itself. The curve would shift inward primarily due to factors that reduce the economy's ability to produce, such as a decrease in resources or technology, not simply because of changes in unemployment rates.

An Increase in Unemployment Will Cause This Year's Production Possibilities