As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A. increases.
B. initially decreases, then increases.
C. decreases.
D. initially increases, then decreases.
Answer: A
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All of the following are arguments in favor of restricting trade EXCEPT
A) comparative advantage. B) protecting domestic jobs. C) protecting emerging industries. D) dumping.
Suppose you observe an increase in the equilibrium price of coffee and a decrease in the equilibrium quantity of coffee. Of the options listed below, this is most consistent with:
A. an increase in the cost of producing coffee. B. a decrease in consumer income assuming coffee is a normal good. C. an increase in consumer income assuming coffee is a normal good. D. a decrease in the cost of producing coffee.
Which of the following explains why deflation is bad for consumers?
a. It reduces the purchasing power of money b. It precedes a long recession. c. It creates a spike in unemployment. d. It makes financial decision making more difficult.
According to the textbook, the best possible solution to the problem of poverty is:
A. the complete elimination of all efforts to assist the poor. B. a negative income tax with the tax credit equal to the poverty threshold. C. to maintain the current system. D. a combination of a negative income tax and public employment.