A production possibilities curve measures cost in terms of dollars spent, not in terms of sacrificed alternatives.
a. true
b. false
Ans: b. false
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Economists may disagree about how to solve an economic problem because they
A. may not be able to use the same models. B. always make the same value judgments. C. are unable to assemble all of the necessary facts about the economy. D. All of these responses are correct.
If the growth rate for GDP was 9 percent and GDP in year 1 was 100, then GDP in year 2 would be
A) 90. B) 109. C) 190. D) 199.
In equilibrium, the price of a transferable emissions permit
A) is constrained to the amount the government first charged for it. B) equals the marginal cost of abatement for all firms. C) equals the marginal cost of abatement for the firm with the highest cost, and exceeds the marginal cost of abatement of other firms. D) equals the marginal cost of abatement for the firm with the lowest cost, and is less than the marginal cost of abatement of other firms. E) equals the marginal social cost of emissions.
Assume that the marginal propensity to save is 0.20 and that the economy is in equilibrium with aggregate expenditure equal to $4,000 billion. If aggregate expenditure falls to $3,500 billion, then the aggregate expenditure curve will shift
a. upward and national income will increase by $2,500 billion b. downward and national income will decrease by $2,500 billion c. upward and national income will increase by $100 billion d. downward and national income will decrease by $100 billion e. downward and national income will decrease by $100 billion