PPF

Question 1

The Production Possibility Frontier shows..

Answer 1

The maximum amount of goods and services that can be produced in an economy given a fixed amount of resources and a fixed level of technology.

Question 2

The productive capacity or potential can only increase if 1)

Answer 2

The quantity or quality of human resources (productivity) are increased by:
- Increases in the population (natural increases or immigration)
- Increases in working population (changes in social attitudes to work)
- Increased quality of human resources (education, improved management and work place practices (technological improvement)).

Question 3

The productive capacity or potential can only increase if 2)

Answer 3

New natural resources are discord

Question 4

The PPF can only increase if 3)

Answer 4

Investment causes an increase in production of manufacturing resources (capital goods).
Determinants of investment include:
- The level of savings in the economy, business confidence, the costs of the investment, the level of expected return of the investment.