Question

9. Which does not shift a macro production possibilities frontier?

A) increased unemployment

B) increased labour force participation rate

C) increased entrepreneurship.

D) increased quantity of land contributing to production.

E) increased education

Answer 1

Answer: increased entrepreneurship

Entrepreneur is a factor of production which coordinates and employ all other factors of production like land , labour and capital in the production process. Thus the entrepreneur play a remarkable role in the production process. PPF assumes full employment of available resources. Thus newly increased entreprenuer cannot employ additional resources. Thus output remain same and PPF does not shift.

Production possibility frontier (PPF) shows different production possibilities of two goods a country produces using given resources, technology and efficiency. It assumes full employment of of resources. An increase in the resources, technology ,efficiency etc leads to rightward shift in PPF. And a depriviation in esources, technology ,efficiency etc leads to leftward shift in PPF.

increased unemployment

Increased unemployment causes fall in output, which cause an leftward shift in PPF

B) increased labour force participation rate

when labour force participation increases, output increases owing to the increased labour. As a result PPF shift outward.

increased quantity of land contributing to production.

When quantity of productive land increases output increases and PPF shift outward.

E) increased education

increased education leads to the increase in th efficiency of workforce, thereby output increases and PPF shift outward direction