(Solved): The diagram defines the economy wide production possibility frontier (PPF) for the country named P ...

The diagram defines the economy wide production possibility frontier (PPF) for the country named Prosperity. Point \( X_{1} \) is one output combination when the economy is working at full employment output. a) Suppose a rise in Prosperity's exports of goods causes a boom. Mark the point \( Y_{1} \) in the diagram that shows the effect of the boom on the economy's total output of goods and services. b) Alternatively, with the economy working at point \( X_{1} \) suppose an improvement in technology increases the productivity of labour. Shift the PPF to show the effect of this event on the economy's full employment output.