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Explain the effect of economic growth on PPC.?
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Explain the effect of economic growth on PPC.?
Effect of Economic Growth on PPC


Economic growth refers to the increase in the production and consumption of goods and services in an economy over a specific period. The production possibilities curve (PPC) is a graphical representation of the maximum output that an economy can produce given its resources and technology. Economic growth can have several effects on the PPC, which are discussed below:


Expansion of the PPC


One of the significant effects of economic growth on PPC is the expansion of the curve. As an economy grows, it can produce more goods and services due to increased resources, technology, and productivity. This expansion of the PPC represents the increase in the maximum output that an economy can produce. Therefore, economic growth leads to an outward shift of the PPC.


Increase in Efficiency


Economic growth can also lead to an increase in efficiency, which means that the economy can produce more output using the same amount of resources. This is because economic growth leads to technological advancements, which in turn, improve productivity. As a result, the economy can produce more goods and services, leading to an upward slope of the PPC.


Opportunity Cost


Economic growth can influence the opportunity cost of producing one good over the other. As the economy grows, it can produce more goods and services, and therefore, the opportunity cost of producing one good over the other decreases. This is because the economy can produce more of both goods and services, reducing the need to choose one over the other. This leads to a flatter slope of the PPC.


Conclusion


In conclusion, economic growth can have significant effects on the PPC. It can lead to the expansion of the curve, an increase in efficiency, and a decrease in the opportunity cost of producing one good over the other. Therefore, economic growth is essential for an economy to increase its output and improve the standard of living of its citizens.
Community Answer
Explain the effect of economic growth on PPC.?
ECONOMIC GROWTH, PRODUCTION POSSIBILITIES: Economic growth is the process of increasing the economy's ability to produce goods and services. It is achieved by increasing the quantity or quality of resources. This process can be illustrated as an outward shift of the production possibilities curve.

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Firstly, and most commonly, growth is defined as an increase in the output that an economy produces over a period of time, the minimum being two consecutive quarters. ... An increasein an economy's productive potential can be shown by an outward shift in the economy's production.

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