Select Ture or False and give a explanation aIn our closedec

Select Ture or False, and give a explanation.

a)In our closed-economy, one-period model, when z (total factor productivity) increases, the production possibilities frontier shifts up and becomes steeper. Ture of Fales

Solution

True, when there is an increase in z (total factor productivity), the PPF shifts out or shits up and also it becomes steeper. Also, C(consumption) increases, l (leisure) may increase or decrease and also Y( production function) and w increases. This is because there is an increase in resources as the maximum production has also increased. Hence the PPF shifts up and becomes steeper.