Exhibit 2-7 Production possibilities curve
For the economy shown in Exhibit 2-7 to operate at point C, it must:
A. be willing to lower the price of grain.
B. use its given resources more efficiently than it would at point A.
C. experience resource unemployment.
D. experience an increase in its resources and/or an improvement in its technology.
Answer: D
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Sammy is willing to lend Oscar $625 today so Oscar can purchase a new set of tires for his pickup truck. Oscar agrees to pay the loan back plus 5% interest in one year. What is the future value of this loan?
A) $595.24 B) $656.25 C) $750.00 D) $812.50
Government policies such as price controls, rent controls, and quantity restrictions have the effect of
A) promoting the attainment of an unhindered market equilibrium. B) allowing quantity demanded to adjust to equality with aggregate supply. C) creating excess quantities demanded or excess quantities supplied. D) pushing prices to market clearing levels more rapidly than private market forces.
A shift from D1 to D2 causes equilibrium price to __________ and quantity to __________.
A. rise; rise
B. fall; fall
C. rise; fall
D. fall; rise
The LM curve shows that, with a fixed supply of money, as GDP rises, the demand for money will ____ and the rate of interest will ____.
A) rise; rise B) fall; fall C) rise; fall D) fall; rise