question_answer

What will be the impact of recently launched 'Clean India Mission' (Swachh Bharat Mission) on the Production possibilities curve of the economy and why?

Or

What will likely be the impact of large scale outflow of foreign capital on Production Possibilities curve of the economy and why?

 

Answer:

The ?Clean India Mission? (Swachh Bharat Mission) will lead to better waste-management technique. Consequent to this, there will be drastic reduction in the number of people falling ill. Both these factors will lead to better and efficient utilisation of existing resources of an economy. Accordingly, the economy will move higher and closer to initial PPC. This movement is being depicted in the below graph with the help of the arrow from point P.

Or

The large scale outflow of foreign capital will lead to a decrease in the availability of resources, thereby shifting the Production Possibility Curve (PPC) parallely to the left from AB to CD as shows in the following diagram. Hence, we can say that leftward shift of PPC results in fall in output and resources.