PPF And Its Relationship With Macroeconomics
In the graph of PPF, Points within the PPF are inefficient and it is the rare possibility in the real world. Inefficient means that it may not be using its available resources.
May be some workers are unemployed creating the macro economic problem of unemployment or may be capital is not using properly. Points outside the PPF are unattainable since the PPF defines the maximum output produced at the given time period so there is no possibility to produce output outside the PPF. Here in PPF, we are not concerned with the combinations of goods which is a micro economic issue rather we are concerned with the overall output produced which is a macroeconomic issue. Economic growth is an increase in the total output of a country over time. It is the long-run expansion of the economy’s ability to produce output. When GDP of a country is increasing it means that country is growing economically. Economic growth is made possible by increasing the quantity or quality of the economy’s resources (labor, capital, land, and entrepreneurship). virtual university