March 2013
Beginner
252 pages
6h 50m
English
Content preview from A Primer on Macroeconomics
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Relaxing the Diagram’s Assumptions
The PPF is drawn based on a given set of resources and a given best way of combining them. If we get more resources or better resources, or an improved way of combining our given resources, then there will be a general increase in what it is possible to produce. In such a case, the PPF will shift outword from PPF1 to PPF2, as shown in Figure 1-4. A decrease in the quantity or quality of resources will shift the whole curve inwards as what it is possible to produce is diminished.
Figure 1-4. A general increase in the production possibility frontier.
A resource or technology change could be specific to only one ...
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