Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential
B. recessionary; higher; potential
C. recessionary; lower; lower
D. expansionary; higher; higher
Answer: A
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The production possibilities frontier is a graph that shows the various combinations of output that an economy
a. should produce. b. wants to produce. c. can produce. d. demands.
A line is parallel to the horizontal axis. The slope of the line is
A) infinite. B) indicative of an inverse relationship between two variables. C) indicative of a direct relationship between two variables. D) zero. E) b and d
Joe is maximizing utility by consuming three colas at $2 apiece and four hot dogs at $3 apiece. The last cola gave him 200 units of utility. How many units of utility did the last hot dog give him?
A. 300 B. 133.33 C. 600 D. 10
If one is inside the production possibilities frontier,
A. more resources are needed to move to the frontier. B. production of one commodity can be produced but not more of both. C. production is not on the production contract curve. D. All of these are true