b) PPF curves and economic output

a) the use of production possibility frontiers to depict:

• economic growth or decline

b) the distinction between movements along and shifts in production possibility curves, considering the possible causes for such changes

PPF graphs represent the production of capital and consumer goods

• if the position on the PPF curve shifts towards the y-axis

  • more capital goods are produced

  • less consumer goods are produced

• if the position on the PPF curve shifts towards the x-axis

  • less capital goods are produced

  • more consumer goods are produced

PPF graphs represent economic decline or growth

• if the PPF curve shifts inwards

  • decrease in the quantity or quality of the factors of production

  • decrease in the maximum productive potential of the economy

  • less capital and consumer goods produced

  • economic decline

• If the PPF curve shifts outwards

  • increase in the quantity or quality of the factors of production

  • increase in the maximum productive potential of the economy

  • more capital and consumer goods produced

  • economic growth