Refer to the information provided in Figure 31.1 below to answer the question(s) that follow.
Figure 31.1Refer to Figure 31.1. Economic growth is represented by
A. a movement from Point A to Point B along ppf1.
B. a shift in the production possibilities frontier from ppf2 to ppf1.
C. a movement from Point B to Point A.
D. a movement from Point B to Point C.
Answer: D
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In a closed economy, a decrease in the money supply will
A) shift the aggregate demand schedule to the left. B) shift the aggregate supply schedule to the right. C) shift the IS curve to the left. D) shift the LM curve to the right.
If policy makers desire a $30 increase in output and the consumption function is C = 100 + .75(Y-T), then they must
a. increase government spending by $8. b. increase taxes by $10. c. cut government spending and taxes by $10. d. decrease taxes by $10.
An inelastic demand indicates that
A) quantity demanded does not vary with changes in the price. B) relatively small changes in price lead to relatively large changes in quantity demanded. C) relatively large changes in price are required to obtain a relatively small change in quantity demanded. D) relatively large changes in quantity demanded lead to relatively large changes in price.
The consumer price index tries to gauge how much incomes must rise to maintain
a. an increasing standard of living. b. a constant standard of living. c. a decreasing standard of living. d. the highest standard of living possible.