Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 72 units of food and 28 machines. This year, it is producing 75 units of food and 30 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 there could still be an increase in output even if the unemployment rate remained unchanged. The other choices (B, C, and D) are all factors that could contribute to an increase in output.

Suppose an Economy Produces Two Goods, Food and Machines