Where would you plot unemployment on a production possibilities frontier?
What will be an ideal response?
a point inside the PPF
FEEDBACK:
Unemployment would be a point inside the frontier where resources are not being used efficiently. If unemployed people found jobs, resources in a society would be used more efficiently.
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Most economists believe there are four reasons the CPI overstates the true inflation rate. List and briefly explain these four reasons
What will be an ideal response?
People who claim to have the ability to accurately predict the future prices of stocks:
A. are strong advocates of the theory of efficient markets. B. are always psychologists. C. should be looked at with skepticism, unless they have information not available to others. D. are unusually lucky, and should be listened to intently.
A significant difference between a monopolistically competitive firm and a purely competitive firm is that the:
A. former does not seek to maximize profits. B. latter recognizes that price must be reduced to sell more output. C. former sells similar, although not identical, products. D. former's demand curve is perfectly inelastic.
The budget constraint shows the
A. amount of a good the consumer will buy at various prices. B. possible combinations of goods that can be purchased with a specified income. C. changes in consumption of goods that a consumer makes when his income increases. D. combinations of goods that generate the same amount of total satisfaction.