Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure.
The Principle of Increasing Opportunity Cost is reflected in the fact that the opportunity cost going from 70 to 80 in economics is:
A. higher than the opportunity cost of going from 80 to 90 in economics.
B. lower than the opportunity cost of going from 80 to 90 in physics.
C. the same as the opportunity cost of going from 70 to 80 in physics.
D. lower than the opportunity cost of going from 80 to 90 in economics.
Answer: D
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A) causes interest rates to rise. B) generates an increase in the demand for money. C) causes the price level to increase. D) causes the purchasing power of money to increase.
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