The maximum possible production of goods and services generated by the fullest employment of the economy's resources is
a. impossible to achieve
b. an unrealistic goal seldom achieved
c. economic efficiency
d. a point above the production possibilities curve
e. possible only if the production possibilities curve shifts inward
C
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Over the last 30 years, the income gap between the rich and the poor has declined.
Answer the following statement true (T) or false (F)
If two households have the same disposable income in the current year, the household with the
A) higher expected future income will consume a larger portion of its current income today. B) lower expected future income will consume more today while it has the money. C) lower expected future income will spend a larger portion of its current income on consumption today because it will increase its saving in the future. D) none of the above
In the Keynesian model in the long run, a decrease in the money supply will cause
A) a decrease in output and an increase in the real interest rate. B) an increase in the real interest rate but no change in output. C) a decrease in the real interest rate and a decrease in output. D) no change in either the real interest rate or output.
Welfare payments _____
a. often increase the marginal cost of being employed b. often decrease the marginal cost of being employed c. have led to a tremendous decline in poverty since 1968 d. have no relationship to the marginal cost of being employed