Question
Unemployment is reduced due to the measures taken by the government. State its economic value in the context of production possibilities frontier.
Solution
As initially, the production in the economy is below its potential due to unemployment, this suggests that the economy is operating at a point below the Production Possibility curve (PPC). As the government starts employment generation schemes, the unemployed resources get utilized. In a situation of full employment the economy would move to a point on the PPC. Hence, economic value is reflected in terms of increased output and income.
