Question

Which of the following would not result in an rightward shift of the PPF?

• A. Increase in investment in Capital Stock
• B. Reduction in Labour Unemployment Rate
• C. Discovery of new oil deposits
• D. Increase in the number of people

Answer 1

Answer: (B)

Reduction in Labour Unemployment Rate

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.