Suppose that in a time of crisis everyone pitches in and works more than full-time. How is this represented by a production possibilities frontier?
What will be an ideal response?
The entire PPF shifts out.
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If, in a time of crisis, people pitch in and work much harder than usual, then the production possibilities frontier shifts out. (If people are willing to work more hours, that represents an increase in the availability of labor.) The economy is able to produce more of everything because everyone is working much harder. Note, however, that this shift may not be sustainable over time.
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Congress created the Federal Reserve System
A) to serve as a lender of last resort. B) to process the receipt of taxes received by the Internal Revenue Service. C) to regulate the value of the U.S. dollar against foreign currencies. D) to provide a source of mortgage loans to the residential housing market.
Refer to Figure 10.9. Other things equal, an increase in the nominal money supply by the Fed is best represented as a change in equilibrium from
A) point A to point B. B) point A to point D. C) point C to point B. D) point C to point D.