Question

An outward shift of a country's PPF over time is called "economic growth" and is illustrated by Exhibit 2.3. What are the four categories of factors that result in economic growth?

A) Labor, capital, entrepreneurship, and technology
B) Imports, exports, government spending, and consumption
C) Inflation, recession, taxation, and trade deficits
D) Consumer goods, capital goods, natural resources, and exports

Answer 1

Economic growth leading to an outward shift of a country's PPF is driven by labor, capital, entrepreneurship, and technology, which all enhance the economy's productive capacity.

Step-by-step explanation:

The factors that result in economic growth and contribute to an outward shift of a country's production possibilities frontier (PPF) over time are labor, capital, entrepreneurship, and technology. These components work together to enhance an economy's productive capacity. Labor growth involves an increase in the quantity and quality of the workforce, which includes education and training. Capital relates to the tools, machinery, and infrastructure that workers use to produce goods and services. Entrepreneurship pertains to the innovation and risk-taking activities that lead to the creation of new products and services. Lastly, technology encompasses new methods of production and improvements in the efficiency of existing processes, which can significantly push the PPF outward as productivity increases.