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A-Level Economics · PPF outward shift (economic growth) diagram question

The frontier shifts out from PPF1 to PPF2. What causes that?

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The answer

A rise in the quantity and quality of the factors of production — more capital, better-trained labour. Route every driver of long-run growth back to that one sentence: the quantity and quality of the factors of production go up. Modern machinery, education and training — productive potential rises, so the whole frontier moves out. Potential growth is an outward SHIFT of the frontier, and it only happens when the quantity and quality of the factors of production rise — more capital, better technology, better-trained labour. Anything working through demand moves the economy WITHIN the frontier, not the frontier itself.

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