Question

Which of the following would not cause an economy's PPC to shift to the right?

• A. Discovery of new and advanced materials which makes manufacturing more efficient.
• B. Decrease in unemployment.
• C. Improvements in technology.
• D. Widespread application of irrigation to agricultural land.

Answer 1

Answer: (B)

Decrease in unemployment.

Reduction in the labour unemployment rate will not result in a rightward shift of the production possibility frontier as supply of resources and technology is constant and only the supply of labour will be increased which indicates that according to law of variable proportion, the production will initially rise but eventually fall which will result in a backward shift of PPF.