economic slow down in some parts of the world has adversely affected demad for indian exports. what will be it's effect on ppf of india?
A production possibility curve (PPC) is a curve which shows different combination of two goods that can be produced using all the resources of an economy with a given level of technology. Usually, a PPC shifts due to the change in the technology or efficiency in the use of inputs, keeping other things constant. But economic performance of an economy also plays a vital role in the shift of PPC. An economic growth leads to an outward shift of the PPC curve. Similarly an economic retardation shifts back the PPC. In this case, due to economic slow-down, India’s exports falls which lead to a fall in the aggregate demand of Indian economy and the production falls. A fall in the aggregate demand puts a pressure on the PPC curve and it shifts leftward.