GST will lead to increase in production potential, increases the GDP of an economy. Therefore, national imcome of the economy will increase. Due to increase in national income with fuller utilisation of resources, PPC will shift rightward.

What is the impact of GST?

However, GST results in increase in the lease payments. Rate of GST on IT sector has increased to 18% but the IT industry will enjoy an increase in sales thanks to demand of GST software. Impact of GST on export of goods and services is going to be positive.

What is the effect of Demonetisation on PPC?

As our economy is over dependent on cash and less than half of the population using banking system for their transactions, demonetisation affects the trade, production and consumption activities adversely. This shifts the production possibility curve to the left side.