How are trade offs illustrated by the production possibilities curve? Consider the case of Federal government spending on national defense and spending on social programs
Please provide the best answer for the statement.
In the production possibilities model, an increase in government spending on national defense will come at the expense of government spending on social programs. If the nation wants to be more secure then it will have to give up the opportunities to use its scarce budget resources for social programs. Conversely, if there is more spending on social programs, there will have to be cuts to national defense, assuming that there is a fixed budget constraint. Moving in either direction on the production possibilities curve will involve trading off one desirable public good for another.
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A well-capitalized bank:
A) does not have stockholders' equity. B) is prone to bank runs. C) owns far more than it owes. D) only accepts deposits but does not advance loans.
An increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to which demand shifter?
A) income B) consumer expectations C) consumer preferences D) prices of other goods