What happens to a country's production possibility frontier if it experiences a natural disaster such as a hurricane or an earthquake? Explain
What will be an ideal response?
The production possibility frontier will shift in. This occurs because the destruction from the hurricane or earthquake likely destroys resources such as capital and natural resources that are used to produce goods and services. Since the quantity of resources in the country is now lower, the country will not be able to produce as much output.
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In the above figure, the most efficient way to produce 15 units is to hire
A) 2 workers. B) 3 workers. C) 4 workers. D) 5 workers.
Explain why market power leads to a deadweight loss. Is the total deadweight loss from market power in the United States large or small?
What will be an ideal response?
Under a fixed exchange rate system, a central bank's intervention in the foreign exchange market will not affect the domestic money supply
Indicate whether the statement is true or false
In the long run, unusually high unemployment
a. indicates that an economy is operating above potential GDP b. forces the wage rate down c. eventually causes the aggregate supply curve to shift upward d. pushes the price level upward e. causes the aggregate demand curve to shift rightward