When the Production Possibilities Curve Shifts Outward

question 41

Multiple Choice

When the production possibilities curve shifts outward,

• A) the long-run aggregate supply curve shifts to the left.
• B) the long-run aggregate supply curve is unchanged.
• C) the price level rises in the long run.
• D) the long-run aggregate supply curve shifts to the right.

---

Definitions:

Laffer Curve

A theoretical representation showing the relationship between tax rates and the amount of tax revenue collected by governments.

Tax Cuts

Reductions in the amount of taxes imposed by the government, often to stimulate economic growth or increase disposable income.

Monetary Policy

The process by which a central bank or monetary authority manages the money supply to achieve specific goals such as controlling inflation, maintaining employment, and stabilizing the currency.

GDP

Gross Domestic Product represents the aggregate market value of all finished goods and services produced domestically within a country over a particular time frame.