Economic growth causes an increase in the quantity and/or quality of resources available for production, leading to an increase in potential output. This results in an outward shift in the production possibilities curve, indicating an increase in the economy's productive potential.

Solved

Economic Growth

Question 98

Multiple Choice

Economic growth:

A) causes an inward shift in the production possibilities curve.
B) does not cause a shift in the production possibilities curve.
C) causes an outward shift in the production possibilities curve.
D
Causes a movement along the production possibilities curve.

Correct Answer: