Asked by Jesus Armenta on May 01, 2024
Verified
Which statement is true?
A) On the production possibilities frontier,unemployment is zero percent.
B) On the production possibilities frontier,85 percent of the labor force is employed.
C) To get out of a recession,we must move to some point closer to the production possibilities frontier.
D) To have economic growth,we must have zero unemployment.
Production Possibilities Frontier
A graphical representation showing the maximum amount of two goods or services that can be produced within a given set of resources.
Recession
A brief spell of economic backslide, with a noted reduction in commerce and industrial production, usually spotted by a fallen GDP in two consecutive quarters.
Employment
A relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee.
- Describe the conditions for full employment and how they relate to the production possibilities frontier.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
C
Explanation :
A recession refers to a situation where the economy is operating below its potential, which means it is operating inside the production possibilities frontier. To get out of a recession, we must increase our production, which can be done by moving closer to the production possibilities frontier. This can be achieved through increasing productivity, investing in capital, increasing the labor force, etc. However, achieving the production possibilities frontier does not necessarily mean zero unemployment, as some level of unemployment is considered natural (frictional and structural). Therefore, options A, B, and D are not correct.
Learning Objectives
- Describe the conditions for full employment and how they relate to the production possibilities frontier.