Production Possibilities Frontier and War

Answer the following questions to check your understanding of the story.

With no war, where does the world economy operate on the PPF?

a) A point like B with a high level of military goods and services.

b) A point like A where only military goods and services are produced.

c) A point like D where only civilian goods and services are produced.

d) A point like C with a high level of civilian goods and services.

As the world enters war, how does production change on the PPF?

It moves __________ from __________.

a) down along the PPF; from point B to point D

b) up along the PPF; from point D to point C

c) up along the PPF; from point C to point B

d) down along the PPF; from point B to point C

If the war continues for a long time, how does the PPF change?

The PPF __________.

a) rotates outward on the military goods axis

b) shifts inward

c) rotates outward on the civilian goods axis

d) shifts outward

Discover more from Econ Eye