The production possibility curve is bowed outward from the origin because of:
a. the law of increasing opportunity costs.
b. the finite nature of the resource base.
c. inefficiency.
d. improper output mix.
e. unemployment.
a
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Contractionary fiscal policy is used to decrease aggregate demand in an attempt to fight rising inflation
Indicate whether the statement is true or false
Which of the following examples shows Adam Smith’s “invisible hand”?
a. Millions of people through buying and selling adjust how resources such as steel are used. b. The Federal Trade Commission uses consumer protection laws to adjust resource allocation. c. The five largest banks adjust loan interest rates, which affect the free market. d. Five countries form a trade agreement that spurs the economy in each country.
All of the following would be potential problems if developing nations around the world emphasized export promotion EXCEPT
A) industrial nations may be unable to absorb the exports of many newly industrializing nations. B) it would be much harder to emphasize exports under the WTO framework if the emphasis in exports requires some kind of subsidies. C) export growth may not add to GDP if it crowds out growth in output of goods for domestic consumption. D) current research has clearly established that there is no causal connection between exports and faster economic growth.
Surplus is:
A. maximized for individuals whose reservation price equals the market price. B. a measure of the value that buyers and sellers get from participating in a market C. negative for those who do not participate in a market. D. All of these are true.