If the economy moves toward the PPC boundary, it indicates an increase in

If the economy moves toward the PPC boundary, it indicates an increase in

• A. Increased inefficiency
• B. Increased efficiency
• C. Unchanged efficiency
• D. Reduced output

Answer: (B)

The production possibilities frontier shows efficient production when resources are fully used. Moving toward the boundary means resources are being used more effectively and closer to full employment, so the economy is operating with greater efficiency. It isn’t increasing inefficiency (that would push away from the boundary), nor is it leaving efficiency unchanged, since getting closer to the frontier signifies a higher level of efficiency. Reduced output would imply moving inward, away from the boundary, which is not what’s described.

The production possibilities frontier shows efficient production when resources are fully used. Moving toward the boundary means resources are being used more effectively and closer to full employment, so the economy is operating with greater efficiency. It isn’t increasing inefficiency (that would push away from the boundary), nor is it leaving efficiency unchanged, since getting closer to the frontier signifies a higher level of efficiency. Reduced output would imply moving inward, away from the boundary, which is not what’s described.