The PP Curve
description
Transcript of The PP Curve
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E Q : H O W D O N AT I O N S I N C R E A S E T H E I R W E A LT H ?
THE PP CURVE
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You must make yourselfworse off in the short runto make yourself betteroff in the long run.
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Study
Leisure
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Peanuts
Oranges
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CapitalGoods
ConsumptionGoods
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http://www.bradyworld.com/cover/minnow.jpg
The ship set ground on the shore of this uncharted desert isle
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http://images.google.com/imgres?imgurl=www.timvp.com/gillign2.jpg&imgrefurl=http://www.timvp.com/gilligan.html&h=270&w=295&prev=/images%3Fq%3Dgilligan%2527s%2Bisland%26svnum%3D10%26hl%3Den%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8
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http://www.tasaday.com/images/_sl-003.jpg
http://www.coracle-fishing.net/corac-pix2/net-11x.jpg
http://www.surfingforlife.com/g/cult_b10.jpg
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http://www.zeroimpactproductions.com/seine-over-freezer.jpg
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http://www.riveroflifefarm.com/images/lodging/th/th2/tree-house-summer.jpg
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CapitalGoods
ConsumptionGoods
By producing more capital goodsrelative to consumption goods,the economy’s Production-possibilites curve to shifts OUTWARD and shifts outward FASTER.
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Capital
Consumption
If the PP shifts outward
This is GOOD!
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Capital
Consumption
If the PP shifts inward
This is BAD!!
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CapitalGoods
ConsumptionGoodsThere are five variables that
shift the PP outward--
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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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Capital
Consumption
Japan 1941
What capital goods did Japanproducein 1940?
What consumptiongoods did it produce?
rice
What did Japan do on December 7, 1941 ?
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Capital
Consumption
Japan 1945
rice
What did the U.S. do toJapan for this dirty deed?
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http://www.nhc.rtp.nc.us:8080/tserve/nattrans/ntimages/hiroshima.jpg
http://www.archives.gov/digital_classroom/history_day/bright_ideas/images/nagasaki.gif
Hiroshima
Nagasaki
morning of August 6, 1945
11:02 am, August 9, 1945
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Capital
Consumption
Japan 1945
rice
What do you think happenedto Japan’s productive labor force?
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Capital
Consumption
Japan 1945
rice
What do you think happenedto the quantity and quality of its natural resources?
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Capital
Consumption
Japan 1945
rice
What do you think happened tothe quantity and quality of its capital stock?
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Capital
Consumption
Japan 1945
rice
What do you think happened toits health and education?
http://hiroshima.tomato.nu/image/park_ma/e11-10.jpg
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Capital
Consumption
Japan 1945
rice
What do you think happened toits technology?
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Capital
Consumption
Japan 1945
rice
What happened to Japan’sPP?
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CapitalGoods
ConsumptionGoods
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http://www.ellsworthamerican.com/archive/news2000/08-24-00/news3_08-24-00b.gif
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CapitalGoods
ConsumptionGoods
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CapitalGoods
ConsumptionGoods
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Guns
Butter
Military
Consumption goods
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WHAT ARE SOME EXAMPLES OF CAPITAL GOODS?