How will an increase in the unemployment rate affect the production possibility frontier (PPF)?

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How will an increase in the unemployment rate affect the production possibility frontier (PPF)?

PPF:

Production Possibility Frontier (PPF) is a graph that shows the possibilities of production in an economy. The PPF is an essential aspect, as it shows all the possible combinations that can be taken up for production with the available resources and factors of production.

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  • The PPF will shift inward.

The unemployment rate affects the PPF, as production processes require labor to produce output. Suppose the unemployment...

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Using the Production Possibility Curve to Illustrate Economic Conditions

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Chapter 3 / Lesson 8
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The production possibility curve demonstrates the potential profit from a given economic condition. See how this illustrates different economic conditions through evaluating scarcity, production factors, efficiency, and opportunity costs.


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