If you move from a point inside the production possibility curve to a point on the production possibility curve, it follows that efficiency is:
A. increased because the economy is now on the production possibility curve.
B. increased only if production of both goods increases.
C. reduced if less of one good is produced.
D. increased as long as the combined output of both goods increases.
Answer: A
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The equilibrium or market clearing price occurs at the point at which
A) quantity demanded equals quantity supplied. B) the supply curve intersects the horizontal axis. C) the demand curve intersects the vertical axis. D) there is a shortage of the desired good.
The Medicaid program provides health insurance for the
A. elderly. B. poor. C. veterans of wars. D. disabled.
If the MPC is 0.70, then the spending multiplier is equal to:
a. 0.70. b. 0.30. c. 0.14. d. 3.33. e. 5.
Both Jones and Smith agree that the economy is in a recessionary gap. Jones proposes a tax cut and believes that it will raise Real GDP and lower the price level. Smith agrees that a tax cut will raise Real GDP, but he argues that it will not lower the price level in the short run. It follows that
A) both Jones and Smith believe that lower taxes will shift the AD curve rightward, but will not shift the SRAS curve. B) both Jones and Smith believe that lower taxes will shift the SRAS curve rightward, but will not shift the AD curve. C) Jones believes that the tax cut will shift the SRAS curve rightward and the AD curve will not shift. Smith believes that the AD curve will shift rightward and the SRAS curve will not shift. D) Smith believes that the tax cut will shift the SRAS curve rightward and the AD curve will not shift. Jones believes that the AD curve will shift rightward and the SRAS curve will not shift.