In an economy widespread unemployment is present. An Earthquake occurs leading to destruction of resources. Will the PPC shift inwards as a result of degrowth of resources or will the point at which the economy is operating (which is already inside the PPC due to widespread unemployment) further move leftwards or will the PPC as well as the point both move inwards (leftwards) ???
Dear student,
With the earthquake and the destruction of resources the PPC will will entirely shift leftwards. This is because the total availability of the resources in the economy has reduced.. However, it must be noted that the economy would still be operating at a point inside the PPC (due to unemployment).
With the earthquake and the destruction of resources the PPC will will entirely shift leftwards. This is because the total availability of the resources in the economy has reduced.. However, it must be noted that the economy would still be operating at a point inside the PPC (due to unemployment).