The fact of increasing opportunity costs means that a production possibilities frontier will
A) be a straight line.
B) reach a maximum and then gradually decrease.
C) bow outward.
D) shift outward over time.
C
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Assume the table shown is for a hat factory, and shows the total production of hats given various numbers of employees. Adding a third worker increases production:
A. by 60 hats.
B. by more than the second worker.
C. to 110 hats.
D. All of these are true.
If there is a sudden increase in government spending, which of the following should the Fed do if it wants to keep the price level steady?
a. Do nothing, since the self-correcting mechanism will adjust the economy b. Sell bonds in the open market c. Wait, since the price level usually does not change when government spending increases d. Decrease the required reserve ratio e. Buy bonds in the open market
The rational expectations theory claims that workers and firms will not make systematic errors when they forecast inflation
a. True b. False Indicate whether the statement is true or false
A planned economy is one in which ________.
A) the government or other centralized group determines wages, sets prices, and distributes resources and products to the common group B) individuals produce enough for personal survival with few resources or goods left over to trade or barter C) individual income ultimately controls purchasing decisions D) government distributes some goods and services through selected social programs, and individual income determines purchasing decisions for other goods and services E) the production and pricing of goods and services is determined through the operation of a market