Final answer:
The correct option is B). An outward shift in an economy's production possibilities curve can be caused by improvements in the labor force or advancements in technology, which both enhance production efficiency. Increases in capital stock and favorable government policy changes can also expand the production capacity of an economy.
Step-by-step explanation:
Factors that can cause an outward shift in the production possibilities curve (PPC) of an economy vary, but key influencers include advancements in technology, improvements in labor force quality, an increase in the physical capital stock, and policy changes that improve the efficiency of the economy. The correct answer to the question is related to the labor force. As the labor force receives better education and training, becomes more skilled, and the availability of quality labor increases, the production capacity of the economy can grow, leading to an outward shift in the PPC. This represents an increase in the economy's potential output. Similarly, the introduction of new technology can make production more efficient, facilitating the production of more goods and services with the same or fewer resources. Additionally, increases in capital stock, such as machinery and buildings, can also enhance production capabilities. Lastly, changes in government policies that lead to more favorable business conditions can also contribute to an expansion of the economy's productive capacity.