Refer to Figure 34.1. Suppose the production possibilities curve PP2 represents the U.S. economy and point C represents the combination of goods and services currently being produced. If welfare discourages people from seeking work and welfare is currently in effect, the most likely result of eliminating welfare in the United States would be
A. A shift from PP2 to PP3.
B. No change from PP2 or point C.
C. A movement from point C to a point on PP2.
D. A shift from PP2 to PP1.
Answer: C
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Refer to the above figure for a particular good. The rightward shift of the curve could have been caused by
A) a decrease in the price of an input. B) a decrease in the price of that good. C) an increase in the price of a complementary good. D) an increase in the price of a substitute good.
If the supply curve for a product is vertical, then the elasticity of supply is: a. equal to zero
b. equal to one. c. greater than one but less than infinity. d. equal to infinity.
The initial impact of the repeal of an investment tax credit is to shift
a. aggregate demand right. b. aggregate demand left. c. aggregate supply right. d. aggregate supply left.
Which president had to cope with both rising deficits and a rising rate of inflation?
A. John Kennedy B. Dwight Eisenhower C. Jimmy Carter D. Ronald Reagan