Economics Production Possibility Frontier Questions
Economic growth refers to an increase in the overall production and consumption of goods and services in an economy over time. It is typically measured by the growth rate of the Gross Domestic Product (GDP).
Economic growth affects the production possibility frontier (PPF) by shifting it outward. When an economy experiences economic growth, it means that it is able to produce more goods and services than before. This is often due to factors such as technological advancements, increased capital investment, improved infrastructure, and a more skilled workforce.
As a result of economic growth, the PPF expands, indicating that the economy can now produce more of both goods and services. This means that the economy has a higher potential for output and can achieve higher levels of production efficiency. The expansion of the PPF reflects the increased productive capacity of the economy, allowing for a greater range of possibilities in terms of production choices.