Which of the following is always true of an economy operating on its production possibilities frontier? (A)Its resources are fully employed. (B)It is allocatively efficient. (C)It cannot trade with other nations because it is the most efficient producer of tradeable goods. (D)It will necessarily operate on the same frontier the following year. (E)It must be a command economy. Which of the following would shift a country’s production possibilities curve inward? (A)A reduction in the country’s inflation rate (B)A reduction in the country's real interest rate (C)A reduction in the size of the country's labor force (D)An increase in the typical retirement age in the country (E)An increase in the country’s cyclical unemployment rate For an economy that is operating inside its production possibilities curve, which of the following is true? (A)It can increase the production of both goods. (B)Its population is growing faster than the economy’s ability to increase production. (C)It is using all available resources efficiently. (D)It cannot move to a point on the production possibilities curve with available technology. (E)It lacks the resources to increase production beyond its current output. The diagram above shows three production possibilities curves (PPCs). If the current PPC is PPC1, which of the following changes indicates a recession? (A)Movement from point X to point Y (B)Movement from point Y to point X (C)Movement from point Y to point Z (D)Shift from PPC1, to PPC0 (E)Movement from point Z to point X Any point inside a production possibilities curve is (A)better than points on the production possibilities curve (B)allocatively efficient but technologically inefficient (C)associated with inefficient use or unemployment of some resources (D)associated with movements along the production possibilities curve (E)associated with constant opportunity costs If producing each additional unit of good X required giving up ever-increasing amounts of good Y, the production possibilities curve between X and Y would be (A)bowed outward (B)bowed inward (C)a straight line (D)horizontal (E)upward sloping Which of the following concepts can be illustrated using the production possibilities curve? I.Choice II.Scarcity
Which of the following is always true of an economy operating on its production possibilities frontier? (A)Its resources are fully employed. (B)It is allocatively efficient. (C)It cannot trade with other nations because it is the most efficient producer of tradeable goods. (D)It will necessarily operate on the same frontier the following year. (E)It must be a command economy. Which of the following would shift a country’s production possibilities curve inward? (A)A reduction in the country’s inflation rate (B)A reduction in the country's real interest rate (C)A reduction in the size of the country's labor force (D)An increase in the typical retirement age in the country (E)An increase in the country’s cyclical unemployment rate For an economy that is operating inside its production possibilities curve, which of the following is true? (A)It can increase the production of both goods. (B)Its population is growing faster than the economy’s ability to increase production. (C)It is using all available resources efficiently. (D)It cannot move to a point on the production possibilities curve with available technology. (E)It lacks the resources to increase production beyond its current output. The diagram above shows three production possibilities curves (PPCs). If the current PPC is PPC1, which of the following changes indicates a recession? (A)Movement from point X to point Y (B)Movement from point Y to point X (C)Movement from point Y to point Z (D)Shift from PPC1, to PPC0 (E)Movement from point Z to point X Any point inside a production possibilities curve is (A)better than points on the production possibilities curve (B)allocatively efficient but technologically inefficient (C)associated with inefficient use or unemployment of some resources (D)associated with movements along the production possibilities curve (E)associated with constant opportunity costs If producing each additional unit of good X required giving up ever-increasing amounts of good Y, the production possibilities curve between X and Y would be (A)bowed outward (B)bowed inward (C)a straight line (D)horizontal (E)upward sloping Which of the following concepts can be illustrated using the production possibilities curve? I.Choice II.Scarcity
Production-Possibilities-Curve-Practice-Problems.docx