Question

Use a PPC to show that there is currently unemployment in the economy, and then there is a decrease in the unemployment rate as workers find jobs making both Good X and Good Y a. PPC curve shifts out at both intercepts b. point moves out towards PPC curve c. none of the above is correct d. point moves in towards origin e. point moves vertically towards PPC curve

Answer 1

To demonstrate unemployment using a PPC, we can consider two goods, Good X and Good Y. A decrease in unemployment would mean that more workers are finding jobs, leading to an increase in production.

Step-by-step explanation:

To demonstrate unemployment using a PPC, we can consider two goods, Good X and Good Y. The PPC curve represents the maximum output of the two goods that can be produced given the available resources and technology in the economy. If there is unemployment, it means that the economy is not utilizing all available resources.

a. PPC curve shifts out at both intercepts: This option is incorrect because a shift in the PPC curve implies an increase in the economy's overall production capacity, not directly related to unemployment.

b. The point moves out towards the PPC curve: This option is also incorrect because a movement outwards on the PPC curve represents an increase in production efficiency, not directly related to unemployment.

c. None of the above is correct: This option is incorrect because there is a correct answer.

d. The point moves in towards the origin: This option is correct as a decrease in unemployment would mean that more workers are finding jobs, leading to an increase in production and a movement towards the origin of the PPC curve.

e. The point moves vertically towards the PPC curve: This option is incorrect because a vertical movement towards the PPC curve would indicate an improvement in production efficiency, not directly related to unemployment.