Statement I: An outward shift in the production possibilities frontier shows economic growth for a country.
Statement II: Our economy generally operates inside the production possibilities frontier.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is true because an outward shift in the production possibilities frontier indicates that a country can produce more goods and services than before, reflecting economic growth. Statement II is also true because economies often operate inside the production possibilities frontier due to factors like unemployment and underutilized resources, meaning they are not producing at their maximum potential output.

Statement I: an Outward Shift in the Production Possibilities Frontier