Question

Which of the following illustrates economic growth?

Please choose the correct answer from the following choices
Answer choices
A. a movement to the left along the current production possibilities frontier
B. a movement to the right along the current production possibilities frontier
C. an outward shift of the production possibilities frontier
D. an inward shift of the production possibilities frontier

Answer 1

Answer:

The correct answer is option C.

Explanation:

A production possibility frontier shows the different combinations of two goods that can be produced using all the available resources and technology. Since the resources are limited, we can increase the production of only one good at a time.

Economic growth will cause the production of both goods to increase. In case there is economic growth, the production possibility frontier will shift outwards. This means that the economy is now able to produce more of both the goods.