In general, production possibilities curves are "bowed out" because:
A) it's wasteful to produce too much of any one good.
B) people generally prefer to consume goods in appropriate combinations.
C) of the law of increasing opportunity cost.
D) of the law of demand.
Ans: C) of the law of increasing opportunity cost.
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Which of the following will shift an economy's production possibilities curve inward?
A. an improvement in technology B. an increase in the unemployment rate C. a decrease in land, labor or capital D. a decrease in the unemployment rate
Which of the following would necessarily increase the equilibrium interest rate?
a. The demand for and the supply of loanable funds shift right. b. The demand for and the supply of loanable funds shift left. c. The demand for loanable funds shifts right and the supply of loanable funds shifts left. d. The demand for loanable funds shifts left and the supply of loanable funds shifts right.
In the short run:
A. some inputs are fixed. B. firms can choose among all possible production techniques. C. all inputs are variable. D. firms can use any input combination they want.
According to the quantity equation, if velocity and real GDP are constant, and the Federal Reserve increases the money supply by 5 percent, then the price level:
A. increases by 5 percent. B. decreases by 5 percent. C. decreases by more than 5 percent. D. increases by more than 5 percent.