Which situation would most likely cause a nation's production possibilities frontier (PPF) to shift inward?

• A. The labor force increases due to immigration.
• B. The nation discovers new resources, increasing its productive capacity.
• C. A natural disaster destroys a significant portion of the nation's capital stock.
• D. Technological advancements improve production efficiency.

Answer: (C)

Verified step by step guidance

1. Understand what a Production Possibilities Frontier (PPF) represents: it shows the maximum possible output combinations of two goods or services an economy can produce given its resources and technology.
2. Recall that the PPF shifts outward when there is an increase in resources or improvements in technology, meaning the economy can produce more of both goods.
3. Recognize that an inward shift of the PPF occurs when there is a reduction in the economy's productive capacity, such as a loss of resources or capital.
4. Analyze the given options: an increase in labor force or discovery of new resources would shift the PPF outward, as would technological advancements.
5. Identify that a natural disaster destroying a significant portion of the nation's capital stock reduces productive resources, causing the PPF to shift inward.