Two reasons why an economy might operate inside of its production possibilities frontier are
a. productive efficiency and technological change
b. depressions and inflation
c. recessions and productive inefficiency
d. opportunity costs and substitutability of resources used in production
e. productive inefficiency and a decrease in the state of technology
C
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According to the theory based on rational expectations and flexible wages and prices,
A) only the combination of discretionary fiscal policy and conservative monetary policy can affect real GDP in the long run. B) neither fiscal nor monetary policy influence real GDP in the long run. C) fiscal policy has less effect on real GDP than monetary policy in the long run. D) monetary policy has less effect on real GDP than fiscal policy in the long run.
Typically, the lower the level of income per person in a country, the lower the level of spending per person on health care. This relationship between income and spending indicates that health care is a
A) luxury. B) inferior good. C) necessity. D) normal good.
What is cost-plus pricing? Why do some firms use cost-plus pricing even when the firms' managers have the resources to devise a pricing strategy that would result in greater profits?
What will be an ideal response?
The idea that the Lorenz curve should be along the 45 degree line is consistent with
A) the productivity standard. B) the egalitarian principle. C) the conservative principle. D) none of the above.