Question
Suppose an economy experiences an increase in unemployment across all industries. What is the result of this increase in unemployment on the production possibilities curve?(1 point)
Responses
The level of unemployment has no effect on the production possibilities curve, so there would be no change to the production possibilities curve.
The level of unemployment has no effect on the production possibilities curve, so there would be no change to the production possibilities curve.
The slope of the production possibilities curve would decrease because an increase in unemployment would decrease the maximum level of production.
The slope of the production possibilities curve would decrease because an increase in unemployment would decrease the maximum level of production.
The curve would shift inward because labor is considered a factor of production. By reducing productive resources, the maximum level of production will decrease.
The curve would shift inward because labor is considered a factor of production. By reducing productive resources, the maximum level of production will decrease.
The curve would shift outward because labor is considered a factor of production. By increasing productive resources, the maximum level of production will increase.
Responses
The level of unemployment has no effect on the production possibilities curve, so there would be no change to the production possibilities curve.
The level of unemployment has no effect on the production possibilities curve, so there would be no change to the production possibilities curve.
The slope of the production possibilities curve would decrease because an increase in unemployment would decrease the maximum level of production.
The slope of the production possibilities curve would decrease because an increase in unemployment would decrease the maximum level of production.
The curve would shift inward because labor is considered a factor of production. By reducing productive resources, the maximum level of production will decrease.
The curve would shift inward because labor is considered a factor of production. By reducing productive resources, the maximum level of production will decrease.
The curve would shift outward because labor is considered a factor of production. By increasing productive resources, the maximum level of production will increase.
Answers
GPT-4o mini
The correct response is:
**The curve would shift inward because labor is considered a factor of production. By reducing productive resources, the maximum level of production will decrease.**
An increase in unemployment indicates that not all available labor resources are being utilized. Since labor is a key factor of production, this underutilization effectively reduces the economy's maximum potential output, leading to an inward shift of the production possibilities curve.
**The curve would shift inward because labor is considered a factor of production. By reducing productive resources, the maximum level of production will decrease.**
An increase in unemployment indicates that not all available labor resources are being utilized. Since labor is a key factor of production, this underutilization effectively reduces the economy's maximum potential output, leading to an inward shift of the production possibilities curve.