PPF Segment 2 Flashcards
What does a point inside the frontier represent?
Underemployment
What does a movement from a point inside the frontier to the frontier represent?
Economic expansion
If the economy is operating at a point inside the frontier, it is likely…?
In a recession
Define recession
Decline in general economic activity
Define economic expansion
Shift from recession toward frontier
What 2 primary changes can cause a shift?
Change in productive resources and technological change
What ratio is productivity measured in?
Ratio of output/per input
How can worker productivity be increased?
Investment in physical & human capital
What does an outward shift in the frontier represent?
Economic growth
What does increasing productivity of workers allow?
More production without an increase in resources
What is economic growth?
Rise over time in nation’s production of goods and services
What does economic growth allow?
For more people to have more of what they want
A movement from the frontier inward represents what?
An economy moving from full employment to recession
Advances in factory machinery may lead to what?
Increased productivity
The value of the next-best alternative when a decision is made is also known as what?
Opportunity cost
