The correct option is: Statement 1 is true and Statement 2 is false
Explanation:
1. Statement 1: Outward shift in PPF implies growth of economy: This statement is true. An outward shift in the production possibility frontier (PPF) indicates an increase in the economy's production capacity. It signifies that the economy can produce more goods and services using the same amount of resources or the same level of goods and services using fewer resources. This expansion of the PPF represents economic growth and improvement in the economy's efficiency or technological progress.
2. Statement 2: If the total amount of resources increases, then PPF shifts inwards. This statement is false. If the total amount of resources increases, the PPF would typically shift outward, not inward. An increase in resources, such as labor, capital, or natural resources, allows the economy to produce more goods and services. As a result, the production possibilities expand, leading to an outward shift of the PPF. Conversely, a decrease in resources would cause an inward shift of the PPF, indicating a decrease in the economy's production capacity. |
