The concept of opportunity cost:
A. is irrelevant in socialistic economies because of central planning.
B. suggests that the use of resources in any particular line of production means that
alternative outputs must be forgone.
C. is irrelevant if the production possibilities curve is shifting to the right.
D. suggests that insatiable wants can be fulfilled.
Answer: B
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Extractive institutions control political power to:
A) enforce property rights and an equitable legal system. B) allow new businesses to enter and compete in a market. C) transfer resources from the ruling party to society. D) transfer resources from society to the ruling party.
Real income is ________
A) equal to money income minus taxes B) equal to the income earned legally C) equal to money income plus benefits minus taxes D) the maximum amount of goods and services that a household can afford
Federal Reserve Chairman Volcker's policy to fight inflation
A) led to the 1981-1983 recession, but was ultimately successful. B) led to the 1981-1983 recession, but did not end high inflation due to beggar-thy-neighbor effects. C) was perfectly complemented by Reagan's decrease in fiscal spending. D) led to the 1981-1983 recession and foretold the economic downturn in the mid-1990s. E) led to an immediate depreciation of the dollar.
"Fine tuning" is any government attempt to regulate inflation or unemployment.
Answer the following statement true (T) or false (F)