Please discuss this with real life example if possible How can country move from producing inside the PPF to producing at a point on the PPF?  Please discuss it with as much detail as you can?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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A country is producing inside the PPF when it is not producing as much in the way of goods and services as it could given the resources it currently has.  This typically happens when a country is in a recession or is in a weak recovery/sexpansion.  The United States is surely operating at a point inside the PPF right now.  This is because its high level (relatively speaking) of unemployment means that not all of its human resources are being used as well as they could be.

In a case like that, there are many schools of thought as to how to get back to producing on the PPF.  For example, the US government has been trying to stimulate the economy by doing things like creating public works projects.  This is a Keynesian approach to getting back on to the PPF.  Conservatives believe that we will get back to the PPF by cutting taxes and decreasing the amount of regulation imposed on businesses.  These are the two major views of how to get back to producing on the PPF.

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