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12 Cards in this Set
- Front
- Back
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Production Possibilities Frontier (Curve)
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a graph that shows all combinations of two goods or services that can be produced if a society's goods are used efficiently
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Assumptions of the PPF (4)
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-Amount of resources is fixed
-State of technology is fixed -Full employment of all resources -Resources used efficiently |
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Outside of PPF vs. Inside of PPF vs. On PPF
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impossible vs. inefficient vs. maximum use of resources
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Reasons a country would in inside the PPF (4)
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-unemployment of labor
-underemployment of labor -inefficient use of plant and equipment -inefficient allocations of resources |
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What does the PPF illustrate? (5)
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-full employment
-opportunity cost -choice -efficiency -economic growth |
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what happens when we produce more of one item:
On PPF vs. Inside PPF |
give up some of other item vs. become more efficient
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PPF:
USA vs. Soviet Union |
emphasis on consumer goods vs. emphasis on military goods
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Consumption Goods vs. Capital Goods
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goods consumers buy, used to fulfill utility (food, clothes, cars, tv, etc) vs. goods used to perform services or make other goods (factories, tractors, steamshovels, drill presses, etc)
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Goal of Economic Growth
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increase output; shift PPF to the right
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More Output per Person =
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higher standard of living
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Sources of Economic Growth (how to grow)
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get more and better physical capital (tools, computers, technology, etc); better human capital (better and smarter workers, better education and training)
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% of new capital in 1999 in:
Congo USA Japan |
7%
17% 30% |
