Which of the following is an assumption under which the production possibilities curve is drawn?
A. Technology is changing.
B. Total unemployment is zero.
C. The supply of resources is fixed.
D. The price level is changing.
Answer: C
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Growth in aggregate demand will
A) cause the short-run Phillips curve to shift to the left. B) increase unemployment. C) move the economy to a higher point on the short-run Phillips curve. D) cause deflation.
As the price of milk increases, producers are normally willing to supply greater quantities. This is known as the law of
a. demand b. gravity c. variable proportions d. profitability e. supply
In a simple circular-flow diagram, total income and total expenditure are
a. never equal because total income always exceeds total expenditure. b. seldom equal because of the ongoing changes in an economy's unemployment rate. c. equal only when the government purchases no goods or services. d. always equal because every transaction has a buyer and a seller.
The study of the choices made by individual households, firms, and government is called:
A. macroeconomics. B. microeconomics. C. managerial economics. D. market economics.