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Figure 2.3. Macroeconomics and the production possibility curve.

In Figure 2.3. we are not concerned with the combination of goods produced (a microeconomic issue), but with the issue whether the total amount produced is as much as it could be (a macroeconomic issue).
The production possibilities of a nation are likely to increase over time. For example, investment in a new plant and machinery will increase the stock of capital, new raw materials may be discovered; technological advances are likely to take place. Labor is likely to become more productive through education and training. This growth in potential output is illustrated by an outward shift in the production possibility curve. This will allow actual output to increase: for example, from point x to point x¹ (Figure 2.4)
Figure 2.4 Shifts in the PPC from now to 5 years later.

Key words

Store запас, склад zaxira, ombor
Rapid быстрый, скорый, крутой tez, tezkor
Expansion расширение, растягивание kengayish, hajmini oshirish.
Divorced развод, разделить nikoxdan ajralish.
Leadership руководство, предводительство boshqarmoq, qo`lga olmoq.
Sales продажа sotilish, sotish.
Incorporated объединяться, соединить birlashtirmoq.
Change перемена, изменены, обмен, пересадка o`zgarmoq.
Descriptive описательный, образный tasvirlovchi, bayon qiluvchi.
Executive исполнительный ijro etuvchi.
Route маршрут yo`nalish.
Insurance страхование sug`urta.
Real настоящий haqiqiy.
Estate поместье, имущество yer-mulk, mol-mulk.
Subsidiary вспомогательный, дополнительный yordamchi, ko`makchi.
Annual ежегодный, годовой yillik
Image образ qiyofa.
Local местный mahalliy.

After studying this module, you should be able to answer the following questions:

1. What is the central economic problem faced by all individuals and societies?
2. What are the three fundamental questions of economics?
3. Why is it essential for people to make economic decisions?
4. What is meant by ‘opportunity cost’? How is it relevant when people make economic choices?
EXERCISES: