When a firm or economy is operating efficiently, it is operating
a. outside its production possibilities frontier.
b. inside its production possibilities frontier.
c. on its production possibilities frontier.
d. at the intersection of the production possibilities frontier and the vertical axis.
e. at the intersection of the production possibilities frontier and the horizontal axis.
c
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Refer to the above figure. Suppose the original long-run equilibrium was at point B. What could have caused the move to the current equilibrium?
A) Aggregate demand must have decreased. B) Input prices must have increased, causing long-run aggregate supply to increase. C) Decreases in the price level caused short-run aggregate supply to fall. D) A temporary reduction in production due to bad weather.
In a system of perfectly flexible exchange rates, an expansionary U.S. monetary policy will cause
a. a rise in the value of the dollar relative to foreign currencies. b. a fall in the value of the dollar relative to foreign currencies. c. no change in the value of the dollar relative to foreign currencies. d. a change in the value of the dollar relative to foreign currencies but the direction of the change is uncertain.
Which of the following decisions are complicated by the value of money changing over time?
A. Buying a $100 concert ticket B. Buying a $100 blender C. Buying a $100 sweater D. Buying a $100 stock
Suppose Tracy will get $500 from her parents when she graduates from college two years from today. If the market interest rate is 8 percent, then what is the present value of that $500?
a. $359.12 b. $428.67 c. $462.96 d. $483.11