A decrease in the unemployment rate may be represented as a movement from a point on the production possibility frontier to a point outside the frontier.

Question

Quizplus · Accepted Answer

The production possibility frontier (PPF) represents the maximum output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized. A decrease in the unemployment rate would likely move the economy closer to the PPF (if it was operating inside the frontier) by utilizing idle resources, but it would not move the economy outside the frontier, as the PPF represents the maximum feasible output.

A Decrease in the Unemployment Rate May Be Represented as a Movement