Assume a country produces two types of goods: manufactured goods and agricultural goods. When this country experiences economic growth, we know that
A) the production possibilities curve will shift inward.
B) there will be movement along the curve toward more agricultural goods.
C) there will be a movement along the curve toward more manufactured goods.
D) the production possibilities curve will shift outward.
D
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An expansion occurs when ________, when ________, or when both of these occur.
A. potential output grows slowly; actual output equals potential output B. potential output grows slowly; actual output rises above potential output C. potential output grows rapidly; actual output equals potential output D. potential output grows rapidly; actual output rises above potential output.
Which of the following is a potential operating instrument for the central bank?
A) the monetary base B) the M1 money supply C) nominal GDP D) the discount rate
Firms discount future profits at the interest rate r because
A) it is the interest rate on their debt. B) it is the same rate as for households. C) Ricardian equivalence holds. D) it has to equal the marginal productivity of capital in equilibrium.
Nonexcludability describes a condition where:
A. one person's consumption of a good does not prevent consumption of the good by others. B. there is no effective way to keep people from using a good once it comes into being. C. sellers can withhold the benefits of a good from those unwilling to pay for it. D. there is no potential for free-riding behavior.