2. Index
1. Acknowledgement
2. Introduction
3. Effect on PPC due to GST
4. Effect on PPC due to Demonetisation
5. Effect on PPC due to Clean India mission
6. Effect on PPC due to Skill India mission
7. Effect on PPC due to Massive unemployment
8. Effect on PPC due to Digital Mission
3. INTRODUCTION
Production possibility curve is a diagrammatic representation showing alternative
production possibilities of to goods with the given resources and technique of
production it is also called production boundary Or production Frontier as it shows
the maximum possible production with the given resources.
It is also called transmission line or Transformation curve because it indicates that if
more of good-X is to be produced then factors of production will have to be
withdrawn from the production of Good – Y and transfer to the production of good-
X. In other words good-Y is transformed into good-X it refers to a
4. Diagrammatical representation showing various combinations of two goods which can be
produced within given resources and Technology.
For example suppose an economy decides to produce only two goods namely, wheat and
cloth with its available resources and given Technology if all the resources are used for the
production of wheat alone than 100 lakh tonnes of wheat can be produced on the contrary
if all the resources are used for the production of cloth alone than 4000 bales of cloth can
be produced if the economy produces both the good then within these limits, various
combinations of two goods can be produced
PPC can be shifted rotated in certain conditions.
1. If resources are increased or decreased the PPC shifts
1. If techniques is improved the PPC shifts or gets rotated.
5. EFFECT OF GOVERNMENT POLICIES:-
There can be a good effect or bad effect of different government policies on
PPC. It is based on which policies will make production more or which will
make production less.
Due to different policies of government the PPC can be shifted rightwards
or leftwards it can also be rotated if technique will be improved due to
certain policies.
6. EFFECTS DUE TO GST
Production possibility curve will undergo a rightward shift. The
reason for that is:-
goods and service tax has an edge over the erstwhiles indirect
taxation system with regards to input tax credit. Previously while
tax calculation the tax payer got input Credit only for the excise
service and VAT production it means if CST, customs or any other
indirect taxes are payable during sale no credit On such taxes
could be set off against The similar taxes paid during purchase of
inputs for production. Unlike it, GST has optimal provision for
availing input tax credit, which has made
7. GST cost efficient. Consequently, capital goods became cheaper than
before causing multi-fold increase in domestic as well as foreign direct
investment this has increase the production possibility curve the
statement of an increase in investment is backed by the post GST
statistical evidence of gross fixed capital formation that increase from
1.6% in quarter 1 To 4.3% in quarter 2
In short run the point will shift inside PPC because of the removal of
taxes and supplier will decrease production
in long run there will be an increase in foreign investment which
would Increase GDP and PPC will shift to the right.
8. EFFECTS DUE TO DEMONETISATION
All the points on the PPC depict Efficient outcomes that is we are reducing exactly the
amount which can be produced by the fixed number of resources but that’s an ideal case
We are obviously inside the area of feasible but inefficient outcomes because it’s very
difficult to have all the outcomes as efficient.
There are two scenarios
1. in short run since the society was depending on cash for a long time,
There purchasing power decreases because of demonetisation decreases industries
which cannot change there supply immediately will have inelastic supply and some other
will have a bit elastic relative to to others overall it will be a less efficient outcome
compared to previous one.
9. 2. In long run however the growth rate will increase because
society will be moving towards a cashless society which will
lead to more buying hence more production. The production
will Definitely increase in the long run.
Moreover, better Technology can also come in the long run
positively reinforcing the effect to the about in long run . So in
long run the outcome is expected to move Rightwards.
10. EFFECTS DUE TO CLEAN INDIA MISSION
PPC in the long run shift right words thereby expanding the the economy due to
increase employment higher demand, more foreign currency inflow from tourist,
better picture of India in the world, higher ranking, multiplier effects etc.
There are two types of resources human resources and physical resources clean
India mission will obviously have a positive impact on our society as it will lead to
increase efficiency in human resource.
Eco-friendly environmental conditions and sanitation will enhance the quality of
human resource and will increase productivity and the overall output.
Hence it will lead to to a rightward shift in PPC curve of the country.
11. EFFECTS DUE TO MAKE IN INDIA
Government make in India campaign Aims at transforming the country into a global
manufacturing Hub and has already made tremendous impact on the investment climate
as evidenced by the growth in foreign direct investment.
So when Investments increases by make in India campaign it will make PPC shift right
word as production will increase it represents economic growth.
Economic growth is an increase in what an economy can produce if it is Using all its starts
resources an increase in an economics productive potential can be shown by and
outward shift in The Economies production possibility curve.
On micro level if make in India goes well then it will increase in employment rate more
quantity of supplied goods lower prices for consumers multiplier boost to economy Etc
12. EFFECTS DUE TO SKILL INDIA MISSION
Skill development programs like skill India Are aimed at human capital formation
that is it increases the capacity and skill of human resources.
Show with the same amount of resources we can produce more goods and services
in the economy due to improve skills.
Suppose you have an unskilled worker from Village if you train that person on
productive jobs skill India then he walks in a more efficient manner then before and
can produce more Goods and services with his Improve skills and hence it promotes
economic growth.
When we improve the skills off existing Workforce productivity increases economic
growth happens and PPC shift right words.
13. EFFECTS DUE TO UNEMPLOYMENT
Massive unemployment in a country will be reflected on go PPC as underutilization
of resources are lying idle when they could have been used for some productive
purposes like farming Manufacturing Etc.
Massive unemployment is a situation of Wastage Human resources which means
there is an under utilization of resources and in this case PPC will not shift anywhere
but this point lies within the PPC.
14. EFFECTS DUE TO DIGITAL INDIA
Digital India programme will lead to Improvement in technology better technology in
the sense of improved online infrastructure and internet connectivity will increase
the production capacity of the economy accordingly the PPC will shift to Right.
Impact of demonetization in India effect PPC off India in short term PPC off India
shift to left words in India everyone is not aware about internet banking of online
payment people Face Money problem and do not use fully utilized resources in short
period. It’s cause PPC shift to left words.
15. BIBLIOGRAPHY
The information of the topic is taken from:
1. Qoura.com
2. Google.com
3. Meritnation.com
And from the book prescribed by cbse i.e. Introductory microeconomics.
