A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. If an economy operates at a point inside its production possibilities curve,
a. it lacks the resources necessary to produce at full employment.
b. it is utilizing some resources inefficiently.
c. it does not confront the problem of scarce goods relative to unlimited wants.
d. it does not exist in the real world since it is impossible for an economy to operate inside its production possibilities curve.
B
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
A lower domestic price level tends to:
a. reduce aggregate expenditures and lower the aggregate quantity of goods and services supplied. b. reduce aggregate expenditures and lower aggregate demand. c. reduce aggregate expenditures and raise aggregate demand. d. increase aggregate expenditures and raise the aggregate quantity of goods and services demanded. e. increase aggregate expenditure on foreign goods and lower net exports.
Which of the following is an example of a positive externality?
a. air pollution b. littering in a public park c. buying a new automobile d. planting a nice garden in front of your neighbor's house e. pollution of a stream
Under which of the following market conditions is it most difficult to maintain a cartel agreement?
a. There are many firms in the industry and these firms have similar costs. b. There are many firms in the industry and these firms have different costs. c. There are few firms in the industry and these firms have similar costs. d. There are few firms in the industry and these firms have different costs.