Assume an economy is incurring unemployment and failing to realize least-cost production.The immediate effect of resolving these problems will be to:

Question

Quizplus · Accepted Answer

Resolving unemployment and least-cost production means that the economy is producing at its potential output level, which is on its production possibilities curve. Therefore, the level of actual output will move closer to the production possibilities curve. It will not affect the distribution of income or shift the production possibilities curve.

Assume an Economy Is Incurring Unemployment and Failing to Realize