ECONOMICS

PROJECT
Effects on PPC due to various
Government policies
 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X is to be produced then factors of production will have to be withdrawn from the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 diagrammatical representation
showing various combinations of two goods which can be produced within given
resources and Technology.
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.
 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 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 GST, 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 GST
cost efficient.
Consequently, capital goods became cheaper than
before causing multi-fold increase in domestic as well as
foreign direct investment this has of an increase in
investment increase the possibility curve statements
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.
 Effects Due to Demonitisation
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.
 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.
 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.
Economicgrowth 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 economy 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.
 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.
 CONCLUSION
Therefore, all the government policies have some
what effect on PPC which can make it shift right
words or leftward. We can used various
government policies to make production easier
faster and greater.
Policieslike GST skill India mission clean India
mission help the PPC to rise and generate
production of goods.