When the production possibility curve shifts outwards, the economy experiences

Step 1: Analyze the question The question asks what an outward shift of the Production Possibility Curve (PPC) means for an economy.

Step 2: Explain the concept The PPC shows the maximum combinations of two goods an economy can produce when it uses all its resources fully and efficiently.

• Points on the curve: resources are fully and efficiently used.
• Points inside the curve: resources are underused or wasted (inefficiency or unemployment).
• Points outside the curve: not attainable with current resources.
• A shift of the whole curve outward: the economy's productive capacity has increased.

Step 3: Work through the options An outward shift happens when:

• the quantity of resources increases (for example, new oil discoveries, a larger labour force),
• the quality of resources improves (for example, better education and training),
• technology improves.

All of these mean the economy can now produce more than before. This is economic growth.

• A. Growth: correct. Productive capacity has expanded.
• B. Over-production: this is a market surplus idea and has nothing to do with a PPC shift.
• C. Inefficient use of resources: this is shown by a point inside the curve, not by a shift of the curve.
• D. Under-production: this also relates to being inside the curve, not to the curve moving outward.

Step 4: Answer The correct option is A. growth.

Tip: Remember the difference between movement and shift:

• Movement to a point inside the curve means inefficiency or unemployment.
• Movement along the curve means a trade-off (opportunity cost).
• Shift outward means economic growth.
• Shift inward means economic decline.