A production possibilities curve indicates the
A. Combinations of goods and services an economy is actually producing.
B. Maximum combinations of goods and services an economy can produce given its available resources and technology.
C. Average combinations of goods and services an economy can produce given its available resources and technology.
D. Maximum combinations of goods and services an economy can produce given unlimited resources.
Answer: B
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Refer to Exhibit 10-5 When TE is $200 billion, what state is the economy in?
A) TE < TP, individuals are buying less output than firms produce. B) TE > TP, individuals are buying more output than firms produce. C) TE = TP, the economy is in equilibrium. D) TE < TP, individuals are buying more output than firms produce. E) TE > TP, individuals are buying less output than firms produce.
Income and revenue from taxes have a specific relationship during recessions. What is it?
A) incomes fall, tax revenue increases B) incomes rise, tax revenue decreases C) incomes fall, tax revenue decreases D) incomes rise, tax revenue increases
In the above figure, Jill's opportunity cost of producing 1 gallon of soda is ________ of bottled water
A) 2 gallons B) 1/4 of a gallon C) 4 gallons D) 1/2 of a gallon E) 1 gallon
In the short run, lowering the federal funds rate shifts the aggregate demand curve ________ so that real GDP ________ and the price level ________
A) leftward; decreases; rises B) rightward; increases; rises C) rightward; decreases; rises D) leftward; decreases; falls E) rightward; increases; falls