A macro production possibilities frontier shifts immediately from a change in
A) the price of inputs.
B) unemployment.
C) preferences for consumer goods and capital goods.
D) the quantity of inputs.
E) all of the above.

Question

Quizplus · Accepted Answer

A macro production possibilities frontier depicts the maximum combination of two goods that can be produced with available resources. A change in the quantity of inputs, such as an increase in labor or capital, would shift the production possibilities frontier outward, increasing the potential for more output of both goods. Changes in the price of inputs or preferences for consumer goods and capital goods would not immediately shift the production possibilities frontier. Unemployment may impact the available resources, but it is not a direct factor in shifting the production possibilities frontier. Therefore, the best choice is D.

A Macro Production Possibilities Frontier Shifts Immediately from a Change