Why does the production possibility frontier have a negative slope?
What will be an ideal response?
Because of scarce resources, increasing the production of one good or service implies that the production of the other good or service must be reduced. Thus, there is a negative relationship between the two goods and the production possibility frontier is downward sloping.
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When raising taxes, the quantity effect tells us that the:
A. government gets more revenue per units sold. B. higher tax rate causes fewer units to be sold. C. government gets less revenue per unit sold. D. higher tax rate causes more units to be supplied.
List appropriate criteria for deciding whether a merger of two firms producing similar products should be permitted
Which of the following is a function of money?
(a) Unit of Account. (b) Store of Value. (c) Standard of Deferred Payment. (d) All of the above
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline