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EQ: HOW DO NATIONS INCREASE THEIR WEALTH? THE PP CURVE.

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Presentation on theme: "EQ: HOW DO NATIONS INCREASE THEIR WEALTH? THE PP CURVE."— Presentation transcript:

1 EQ: HOW DO NATIONS INCREASE THEIR WEALTH? THE PP CURVE

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3 You must make yourself worse off in the short run to make yourself better off in the long run.

4 Study Leisure

5 Peanuts Oranges

6 Capital Goods Consumption Goods

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8 The ship set ground on the shore of this uncharted desert isle

9 26svnum%3D10%26hl%3Den%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8

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14 Capital Goods Consumption Goods By producing more capital goods relative to consumption goods, the economys Production-possibilites curve to shifts OUTWARD and shifts outward FASTER.

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17 Capital Consumption If the PP shifts outward This is GOOD!

18 Capital Consumption If the PP shifts inward This is BAD!!

19 Capital Goods Consumption Goods There are five variables that shift the PP outward--

20 Five Variables that Shift the PP Outward: 1. Increase the productive labor force (productivity). 2. Increase the quantity and quality of natural resources. 3. Increase the quantity and quality of capital. 4. Increase health and education. 5. Increase technology.

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22 Capital Consumption Japan 1941 What capital goods did Japan produce in 1940? What consumption goods did it produce? rice What did Japan do on December 7, 1941 ?

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24 Capital Consumption Japan 1945 rice What did the U.S. do to Japan for this dirty deed?

25 Hiroshima Nagasaki morning of August 6, :02 am, August 9, 1945

26 Capital Consumption Japan 1945 rice What do you think happened to Japans productive labor force?

27 Capital Consumption Japan 1945 rice What do you think happened to the quantity and quality of its natural resources?

28 Capital Consumption Japan 1945 rice What do you think happened to the quantity and quality of its capital stock?

29 Capital Consumption Japan 1945 rice What do you think happened to its health and education?

30 Capital Consumption Japan 1945 rice What do you think happened to its technology?

31 Capital Consumption Japan 1945 rice What happened to Japans PP?

32 Capital Goods Consumption Goods

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34 Capital Goods Consumption Goods

35 Capital Goods Consumption Goods

36 Guns Butter Military Consumption goods

37 WHAT ARE SOME EXAMPLES OF CAPITAL GOODS?


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