If the production of capital goods is shown along the horizontal axis of a production possibilities curve, and the production of consumer goods is shown along the vertical axis of a production possibilities curve, and the economy desires to have a rapid
rate of economic growth, then the economy should produce at a point
A) near the middle of the curve dividing resources equally between the production of consumer and capital goods.
B) at a point near the vertical axis concentrating on the production of consumer goods.
C) at a point near the horizontal axis concentrating on the production of capital goods.
D) at a point inside the curve allowing the economy to adjust rapidly to changes in economic activity.
Answer: C
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A binding price ceiling i. causes a surplus. ii. causes a shortage. iii. is set at a price above the equilibrium price. iv. is set at a price below the equilibrium price
a. (ii) only b. (iv) only c. (i) and (iii) only d. (ii) and (iv) only
The economy is in a recessionary gap, there is incomplete crowding out, and government implements expansionary fiscal policy. It follows that
A) Real GDP will fall. B) the AD curve will shift to the right. C) the price level will fall. D) the recessionary gap will necessarily be completely eliminated. E) b and d
quantity supplied
What will be an ideal response?
Critics of unions tend to focus on the fact that unions
A) tend to generate higher wages. B) reduce profits. C) are politically active. D) engage in restrictive labor practices.