With consumption goods measured on the vertical and capital goods measured on the horizontal axis of a production possibilities curve, for Ethiopia to increase its future economic growth, it must choose a point that is
a. inside the curve
b. further away from the origin on the horizontal axis
c. further away from the origin on the vertical axis
d. outside the curve
e. closer to the origin on the horizontal axis
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
All economists agree that to justify that market failure has occurred, it is sufficient to have the market choose an inferior product over a superior product.
Answer the following statement true (T) or false (F)
Suppose a monopoly faces an inverse demand curve of P = 100 ? 2Q and has constant marginal cost of 6Q. If the government is considering legislation that would regulate price to the competitive level, what is the maximum amount the monopoly would spend on (legal) lobbying activities designed to thwart the regulation?
A. $500 B. $62.50 C. $562.50 D. None of the answers is correct.
An increase in the reserve ratio
A. increases the money multiplier. B. will cause banks to make more loans. C. has a contractionary effect on the money supply. D. has an expansionary effect on the money supply.