How would the Great Recession of 2007–2009 be pictured in a typical production possibilities curve?
In a typical production possibilities curve, consumer goods would be on one axis and capital goods on another axis. A curved line bowed out from the origin would represent production possibilities for the United States. During the Great Recession of 2007–2009, the U.S. economy was not located on the frontier of its production possibilities, but rather at an interior point inside its production possibilities. This could be represented by a point similar to A. This point indicates that the U.S. economy was not producing what it was capable of producing had there been full employment of resources.
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Due to extremely large fixed costs, an electricity generating plant probably experiences which of the following returns to size?
A. diseconomies of scale B. economies of scale C. diminishing marginal product D. constant returns to scale
An import quota will make the supply curve for the imported good
A. unitary elastic. B. perfectly inelastic. C. negatively sloped. D. perfectly elastic.
Some economists have proposed making the tax treatment of employer-provided health insurance the same as the tax treatment of individually purchased health insurance and out-of-pocket health care spending. Such changes would make it more likely that
A) consumers would pay prices closer to the actual costs for routine medical care. B) employers would provide more generous medical coverage to their employees. C) insurance deductibles would decrease. D) the quantity of medical services demanded would increase.
The figure above illustrates the current market for fast-food workers in Baltimore
a. Without any government intervention, what is the equilibrium wage rate and amount of employment? b. If the city government imposes a minimum wage of $3 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not? c. If the city government imposes a minimum wage of $6 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not?