Economic growth can be depicted on a production possibilities frontier (PPF)as an
A) inward shift of the PPF.
B) outward shift of the PPF.
C) inward rotation along the x axis.
D) inward rotation along the y axis.
E) increase in opportunity cost.

Question

Quizplus · Accepted Answer

An outward shift of the PPF represents an increase in the economy's capacity to produce goods and services, which is a result of economic growth. The other choices, such as inward shifts or rotations along either axis, represent a decrease in the economy's capacity to produce goods and services, which is not indicative of economic growth. Increase in opportunity cost may occur with economic growth but does not necessarily depict it on a PPF.

Economic Growth Can Be Depicted on a Production Possibilities Frontier