Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the
A) United States beyond its production possibilities frontier.
B) United States inside its production possibilities frontier.
C) U.S. production possibilities frontier outward.
D) U.S. production possibilities frontier inward.
C
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Which of the following scenarios describes an action that is not rational from an economic point of view?
A) After drinking one martini (shaken, not stirred), James buys and drinks a second martini even though the marginal benefit of the second martini is lower than the marginal benefit of the first. B) Eric buys a replacement ticket to the basketball game after he realizes that he accidentally left his original ticket at home. C) Emily chooses to attend a social event on Tuesday night instead of studying even though she has an important exam on Wednesday morning. D) US Airways sells a last minute ticket to Don for $50 even though its average cost per passenger is $250. E) None of the above
A homeowner, frustrated with his next-door-neighbor's refusal to mow his lawn, decides he wants to purchase the house from his neighbor and rent it to a more conscientious person, but his neighbor refuses to sell. In this case,
A) eminent domain would likely be used to reduce transactions costs. B) eminent domain would likely be used to reduce the holdout problem. C) eminent domain would not likely be used. D) eminent domain would likely be used because this transaction would increase cooperative surplus.
According to the liquidity premium theory of the term structure, a slightly upward sloping yield curve indicates that short-term interest rates are expected to
A) rise in the future. B) remain unchanged in the future. C) decline moderately in the future. D) decline sharply in the future.
If the MPC = 0.80, the government purchases multiplier is
A) 2. B) 4. C) 5. D) 8.