Question

Production in an economy is below its potential due to unemployment. Government has
started employment generation schemes. Explain its effect on the Production Possibilities
Frontier.

Answer 1

If an economy produces below it's potential level then it doesn't mean that the reason behind this is unemployment ...... The actual reason for this is..... resources are not fully and efficiently utilised.......

hence, govt has started employment schemes then it's impact on PPF will be as...... that one economy which was producing under the PPC it will now generates production on the PPC but not shift in PPC ......