Identify the impact of unemployment on PPC (Production Possibility Curve).

Economy will operate inside the PPC

The correct answer is option (4) : Economy will operate inside the PPC

Unemployment means that the economy is not utilizing all its available resources efficiently. The Production Possibility Curve (PPC) represents the maximum possible output when all resources are fully and efficiently employed. When there is unemployment, the economy operates inside the PPC rather than on the curve itself.

• Leftward Shift in PPC: This happens due to a reduction in resources (e.g., natural disasters, war, etc.), not just unemployment.
• Rightward Shift in PPC: This happens when there is economic growth, such as an increase in resources, technology, or labor force skills.
• Movement along the same PPC: This refers to a reallocation of resources between two goods, not unemployment.