ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An upwards shift along the PPC
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A downwards shift along the PPC
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An inwards shift of the PPC
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An outwards shift of the PPC
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Detailed explanation-1: -If a natural disaster occurs, it will destroy most of the natural resources. The decline in the resources will shift the production possibility frontier (PPF) curve inward. This is because PPF shows the possible mix of goods produced with the given technology and resources.
Detailed explanation-2: -An inward shift in the PPC occurs when the resources available for production fall in quantity, reduce in quality, or both. A fall in quality can be due to the depletion of resources by natural factors such as floods and droughts or because some of the resources were non-renewable and have now been used up.
Detailed explanation-3: -A PPC will shift inwards or outwards when there is a change in the factors of production. The factors of production are land, labour, capital, and enterprise. When a factor of production such as capital increases, the PPC shifts outwards, indicating that the economy can produce more.
Detailed explanation-4: -An inward shift of the production possibility frontier (PPF) represents a fall in a nation’s supply-side or productive capacity. One cause could be the effects of natural disasters such as drought, earthquakes or severe floods which destroy built-up capital and potentially causes significant loss of life.