Economic Growth Shifts out the PPF    As an economy grows, its PPF shifts outwards. Points or outcomes that had not been feasible or obtainable can become feasible due to growth. Growth can take many forms, including: the discovery or acquisition of new resources, technological change, growth in the labor force, an increase in the skills and abilities of the labor force, or an increase in the amount or quality of productive equipment available.

   In the graph to the right, we show a PPF for some country with a trade-off between Education (Edu.) and Health Care (Health). Our assumption here is that Maximum Educational output is originally 800 units if it produces only education, and 1100 units of health care if it only provides health care.21 Suppose this country undergoes improvements in technology and worker skills that directly benefit the production both of Education and Health Care. In this case, the PPF would shift outward as shown so that the maximum amounts of both Education and Health Care attainable have increased. All the points in the yellow shaded region and on the outer green PPF were unobtainable before, but after this shift (due to improvements in technology and worker skills) any point on or under the outer PPF is attainable.

21 A "unit" of education or health care can be almost anything. For example, a unit of education could mean providing education to 1000 students from kindergarten through college, while a unit of health care might mean care at some specified level for 1000 citizens.

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