In a production possibilities frontier model, a point inside the frontier is
A) productively and allocatively inefficient. B) productively inefficient.
C) productively efficient. D) allocatively efficient.
B
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The marginal propensity to consume (MPC) is the fraction of additional income that is spent
Indicate whether the statement is true or false
Nations with low levels of GDP per capita may converge to richer nations if
A) nations with high levels of income experience a continuously increasing growth rate. B) nations with lower levels of income grow more quickly than those with higher levels of income. C) nations with lower levels of income grow more slowly than those with higher levels of income. D) nations with lower levels of income spend less on investment.
If the output gap equals 1.8 percent, then:
A. there is significant cyclical unemployment. B. cyclical unemployment equals the sum of structural and frictional unemployment. C. there is an expansionary gap. D. potential GDP exceeds actual GDP.
Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:
What will be an ideal response?