Which of the following will
not
produce an outward shift of the production possibilities curve?
Reduction in unemployment rate.
How? Wouldn't more employment produce more goods??
The reduction in the unemployment rate can actually lead to an outward shift of the production possibilities curve. When the unemployment rate decreases, it means there are fewer unemployed workers, which typically leads to an increase in the labor force. With more people employed, the economy's productive capacity increases, allowing it to produce more goods and services.
However, if we consider the term "outward shift" as an increase in the maximum possible production level of an economy, there is one scenario that might not result in such an outcome. If the reduction in the unemployment rate is due to a decrease in the labor force rather than an increase in employment, it may not lead to an outward shift. For example, if people give up looking for work and exit the labor force entirely, it would not result in additional production and an outward shift of the production possibilities curve.
Therefore, it is important to clarify whether the reduction in the unemployment rate is accompanied by an increase in employment or a decrease in the labor force to determine whether it will produce an outward shift of the production possibilities curve.