Which statement is true?
A)On the production possibilities frontier,unemployment is zero percent.
B)On the production possibilities frontier,85 percent of the labor force is employed.
C)To get out of a recession,we must move to some point closer to the production possibilities frontier.
D)To have economic growth,we must have zero unemployment.

Question

Quizplus · Accepted Answer

A recession refers to a situation where the economy is operating below its potential, which means it is operating inside the production possibilities frontier. To get out of a recession, we must increase our production, which can be done by moving closer to the production possibilities frontier. This can be achieved through increasing productivity, investing in capital, increasing the labor force, etc. However, achieving the production possibilities frontier does not necessarily mean zero unemployment, as some level of unemployment is considered natural (frictional and structural). Therefore, options A, B, and D are not correct.

Which Statement Is True