Figure 2-2
Assume that U.S. agricultural land is used either to raise cattle for beef or to grow wheat. represents the production possibility frontier for beef and wheat. The opportunity cost of moving from point G to point F equals
a.
0.25 million bushels of wheat
b.
1.75 million bushels of wheat
c.
0.125 bushels of wheat
d.
8 bushels of wheat
e.
2 bushels of wheat
e
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With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that
A) capital and labor are perfect substitutes. B) capital and labor must be used together in a certain proportion. C) capital is not productive. D) labor is not productive.
When the economy fluctuates around its long-run aggregate supply:
A. it is called the business cycle. B. the economy is in a state of chaos. C. the value of currency becomes unstable. D. we must be in a recession.
Which of the following statements best describes the expected pattern of trade imbalances?
a. The expected pattern of trade imbalances in the world economy has been that low-income economies will run trade surpluses, while middle and high-income economies will run trade deficits. b. The expected pattern of trade imbalances in the world economy has been that low and middle-income economies will run trade surpluses, while high-income economies will run trade deficits. c. The expected pattern of trade imbalances in the world economy has been that high-income economies will run trade surpluses, while low- and middle-income economies will run trade deficits. d. The expected pattern of trade imbalances in the world economy has been that low and high-income economies will run trade surpluses, while middle-income economies will run trade deficits.
Which of the following is an example of an excise tax?
a. a tax on the wages that a firm pays its workers b. a tax on tobacco c. a tax on corporate profits d. the portion of federal income taxes earmarked to pay for Social Security and Medicare