The production possibilities frontier illustrates
A. the fundamental fact of scarcity.
B. the opportunity cost of acquiring more of one good.
C. maximum output utilizing all resources efficiently.
D. All of the responses are correct.
Answer: D
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Other things equal, the equation for the real interest rate indicates that:
a. as inflation increases, the real interest rate will rise. b. as inflation increases, the nominal interest rate will fall. c. as inflation decreases, real income will fall. d. as inflation decreases, the real interest rate will rise. e. as inflation changes, the real interest rate will not change.
Attempts to keep the economy always within a hair's breadth of full employment is called
a. shock absorption. b. lagging. c. fine tuning. d. crowding out.
Exhibit 3-3 Demand curves
Assume that crackers and soup are complementary goods. Which of the graphs in Exhibit 3-3 depicts the effect of a promotional discount that decreases the price of crackers on the demand for soup?
A. Graph A. B. Graph B. C. Graph C. D. Graph D.
Refer to the above graph. The long-run aggregate supply curve would be represented by which line?
A. 1 B. 2 C. 3 D. 4