Question

List and discuss the two main factors of economic growth according to the production possibility frontier model.

Answer 1

According to the production possibility frontier model, the long-run economic growth will increase when the PPF can be shifted to the right (the potential output increases). there are two key factors in this. The first is the growth of technology. As technology grows, more can ve produced with the same inputs and thus the output grows. The other way to increase growth is by increasing the availability of inputs.If the inputs used in the production process increases, more can be produced and the long run economic growth increases.