Because you can get more of one good only by giving up some of another good, the shape of a production possibility curve is:
A. perfectly vertical.
B. perfectly horizontal.
C. upward-sloping.
D. downward-sloping.
Answer: D
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Assume the deposit expansion multiplier is 3.0. If the Treasury borrows $5 billion from the Non-bank public and spends it on the public, bank reserves will
A) rise by $5 billion. B) fall by $5 billion. C) rise by $15 billion. D) not change.
If a small percentage change in price causes a larger percentage change in the quantity demanded, the good has:
A. an inelastic demand. B. a low magnitude of response. C. an elastic demand. D. a high magnitude of response.
Most goods in the economy are
a. club goods. b. common resources. c. public goods. d. private goods.