Which of the following statements is correct?
A) An increase in productivity moves the economy from inside the production possibilities frontier to the frontier itself.
B) A reduction in unemployment shifts the entire production possibilities frontier outward.
C) An increase in unemployment shifts the economy from a point outside the production possibilities frontier back to the production possibilities frontier.
D) An increase in productivity shifts the economy from producing at a point on the production possibilities frontier to a point outside the production possibilities frontier.
E) An increase in unemployment shifts the economy further inside its production possibilities frontier.
E
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Current income minus spending on current needs equals:
A. transfers. B. wealth. C. saving. D. investment.
Theories of economic business cycles have evolved to a point of agreement: they are caused internally by interaction between an economy's multiplier and accelerator
Indicate whether the statement is true or false
Advocates of stabilization policy argue that when there is a recession, the government should increase the money supply and increase government expenditures.
a. True
b. False
Indicate whether the statement is true or false
Adam Smith believed that people's pursuit of their own self-interests
a. tended to promote the general welfare
b. required the government's "invisible hand" to keep the economy running smoothly
c. might cause aggregate demand to be greater than aggregate supply
d. would increase the wealth of a nation, which was the quantity of gold and silver it owned
e. would decrease the wealth of a nation, which was its ability to produce goods and services