Question

How is PPC affected by unemployment in the economy? Exaplain.

Answer 1

PPC is said to be the curve that shows all the combinations of two goods that can be produced in an economy with the fuller utilisation of the given resources in the most efficient way. In the given question, unemployment implies inefficient use of resources. Thus, if there is unemployment or inefficient use of resources in an economy then the point on the PPC will shift below the PPC.
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