Assume an economy is incurring unemployment. The effect of resolving this problem will be to
A) move the level of actual output closer to the economy's production possibilities curve.
B) create a less equal distribution of income.
C) shift its production possibilities curve to the left.
D) shift its production possibilities curve to the right.

Question

Quizplus · Accepted Answer

Resolving unemployment means more people will be employed and contributing to the economy's output potential, which will move the level of actual output closer to the production possibilities curve. B and C are incorrect because reducing unemployment should not create a less equal distribution of income, nor should it shift the production possibilities curve to the left. Option D is incorrect because resolving unemployment should not shift the production possibilities curve to the right.

Assume an Economy Is Incurring Unemployment