A (very, very small) country produces milk and shirts and its production possibilities frontier is in the table above. The nation is currently producing at point B
What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?
At point B, the opportunity cost of 2 additional gallons of milk is 20 shirts per gallon of milk. At point C, the opportunity cost of 2 additional gallons of milk at 30 shirts per gallon of milk. At point D, the opportunity cost of 2 additional gallons of milk is 40 shirts per gallon of milk. The opportunity cost of 2 additional gallons of milk increases as more milk is produced.
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If the Fed fears inflation, then the Fed
A) directs banks to raise the nominal interest rate. B) will increase the income tax rate on interest income. C) directs banks to lower the nominal interest rate. D) will sell government securities in the open market. E) will buy government securities in the open market.
Nonfinancial businesses may acquire funds by borrowing from a commercial bank or by ________
A) purchasing short-term assets B) issuing securities C) issuing insurance policies D) trading on an exchange
The above figure shows the demand curve for crude oil. The demand curve has unitary price elasticity when price equals
A) $0. B) $1. C) $10. D) $20.
The production possibilities frontier will shift if there is a change in
a. technology b. unemployment c. product prices d. society's preferences for commodities e. the quantities of the two goods being produced