The other solrrce of economic growth is progress in technology,
the technical means for the production of goods and services. Suppose
Tom figures out a better way either to catch fish or to gather coconuts-
say, by inventing a fishing hook or a wagon for ransporting coconuts. Either
invention would shift his production possibilities curve outward. However, the shift
would not be a simple outward expansion of every point along the PPC. Technolog;r specific
to the production ofonly one good has no effect ifall resources are devoced to the
other good: a fishing hook will be of no use ifTom produces nothing but coconuts. So che
point on rhe PPC that represents the number of coconuts that can be produced if there is
no fishing will not change. In real-world economies, innovarions in the techniques we use
to produce goods and services have been a crucial force behind economic growth.
Again, economic growth means an increase in what the economy can produce.'What
the economy actually produces depends on the choices people make. After his production
possibilities expand, Tom might not choose to produce both more fish and more
coconuts; he might choose to increase production of only one good, or he might even
choose to produce less of one good. For example, if he gets better at catching fish, he
might decide to go on an all-fish diet and skip the coconuts, just as the introduction of
motor vehicles led most people to give up horse-drawn carriages. But even if, for some
reason, he chooses to produce either fewer coconuts or fewer fish than before, we
would still say that his economy has grown, because he could, have produced more of
everything. If an economy's PPC shifts inward, the economy has become smaller. This
could happen if the economy loses resources or technologr (for example, if it experiences
war or a natural disaster).