Suppose an economy produces two goods: food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 45 units of food and 25 machines.This year,it is producing 50 units of food and 30 machines.Which of the following would NOT explain the increase in output

Question

Quizplus · Accepted Answer

A reduction in unemployment would not directly affect the output of the economy unless it led to an increase in the labour force or worker productivity. Therefore, it cannot explain the increase in output of food and machines.

Suppose an Economy Produces Two Goods: Food and Machines