Use the following production possibilities frontier to answer the next question.
The selection of which point on the production possibilities frontier is most likely to result in the largest increase in economic growth over time?
A. Point 1
B. Point 2
C. Point 3
D. Point 4
Answer: A
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If the forward exchange rate of the yen in terms of dollars is greater than the spot exchange rate,
A) Japanese interest rates must be higher than U.S. interest rates. B) U.S. interest rates must be higher than Japanese interest rates. C) market participants must be expecting the dollar to appreciate against the yen. D) market participants must be expecting the dollar to depreciate against the yen.
If a firm buys a delivery van for $18,000 and can resell it in 2 years for $7,500, the sunk cost is
A) $10,500. B) $7,500. C) $18,000. D) $0.
When the government enacts policies to redistribute income,
a. the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. b. the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. c. the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. d. the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.
From uncovered interest parity, we know that when the domestic currency is expected to depreciate, the domestic interest rate should be
A) greater than the foreign interest rate B) greater than the foreign return C) less than the foreign interest rate D) less than the foriegn return