When a society achieves production efficiency, it is
A) definitely producing at a point on its PPF.
B) perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF.
C) definitely producing that combination of goods and services that society values most highly.
D) not fully employing all of its available resources to produce goods and services.
E) enjoying a free lunch.
A
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If other factors are held constant, an increase in the price level
A) causes desired net export spending to rise. B) causes the real value of the money to increase. C) causes desired net export spending to fall. D) induces people to spend their money faster.
The long-run Phillips curve indicates that
A) potential GDP can never be achieved. B) there is no way to control the inflation rate in the long run. C) any inflation rate is possible at the natural unemployment rate. D) any unemployment rate is possible at the natural inflation rate. E) there is a tradeoff between the inflation rate and the unemployment rate in the long-run.
In the context of the neoclassical growth model, which of the following does NOT explain the growth rates of countries which are initially poor?
A) nations which are below their steady-state growth paths will grow more slowly until they reach the steady state B) the rate of return is higher in poor countries C) capital flows from rich countries to poor countries D) the passage of time allows poor countries to adopt the productive techniques of rich countries.
Hyperinflation might lead to a severe decline in total output if
What will be an ideal response?