Question

When the production possibilities curve increases, a corresponding increase would take place with aggregate demand. decrease would take place with aggregate demand. decrease would take place with short run aggregate supply. decrease would take place with long run aggregate supply. increase would take place with long run aggregate supply.

Answer 1

Answer: increase would take place with long run aggregate supply.

Step-by-step explanation:

The Production Possibilities Curve shows the highest combinations of two goods that can be produced if all resources are utilized efficiently.

Should this curve increase, it would mean that the capacity to produce has increased in the country and they are now able to produce more goods than before.

This would impact the long run aggregate supply curve by shifting it to the right to show that more goods can now be produced in the economy than before.