For my econ class, I have to write a 200 word essay over the question:
“Could a nation’s production possibilities frontier ever shift inward? Discuss whatever might cause such a shift to occur.”
Does anyone know any good resources concerning this topic or any ideas on what might cause such a thing to happen?
Send all your men to war, you have a labor shortage (kill em, great for unemployment)… fuel shortage caused by price controls and rationing means.. if suddenly all coal powerplants were to be shut down, the electricity to run machines would not be available.. a plant virus that prevents corn harvest leads to greater scarcity of high fructose cornsyrup affects cereal and beverage production until substitutes are found.. Are these on track?
any decrease in available inputs.
I think that George Reisman does the best job of addressing this issue. Here is a recent daily article on it: http://mises.org/daily/3353. He goes into more depth in chapters 15 and 16 of his book Capitalism. I’d also suggest Roger Garrison’s book Time and Money, which shows the graphical relationship between the PPF and capital structure and also explains how production can temporarily extend beyond the PPF.