Suppose an economy produces two goods: food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 65 units of food and 23 machines.This year,it is producing 72 units of food and 25 machines.Which of the following would NOT explain the increase in output

Question

Quizplus · Accepted Answer

The increase in output cannot be explained by a reduction in unemployment alone as it does not increase the factors of production itself. A decrease in unemployment may lead to an increase in the labor force and worker productivity, but it alone cannot explain the increase in output. On the other hand, an increase in the labor force, an improvement in technology, and an increase in worker productivity can all contribute to an increase in output by increasing the factors of production or making them more efficient.

Suppose an Economy Produces Two Goods: Food and Machines