Refer to the graph below. 
Suppose that the opportunity cost of producing 10 chickens is always 8 turkeys. Given this, the relevant production possibility curve must be:
A. I.
B. II.
C. III.
D. IV.
Answer: B
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An important role of financial institutions is to
A) provide borrowers with low interest rates. B) provide information to lenders about the quality of financial claims issued. C) buy primary securities. D) control the money supply.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.
Suppose fairness is defined as those with the highest incomes can afford to pay a greater proportion of their income in taxes. Then which of the following taxation systems would be consistent with this notion of fairness?
A. A true flax tax. B. A flat sales tax on consumption purchases. C. A progressive tax on income. D. A fixed federal tax of $5,000 that everyone pays regardless of income status.
Which of the following is an example of an automatic stabilizer?
A. a temporary tax rebate B. cost of living adjustments to Social Security payments C. unemployment benefits D. all of these