Any combination of two goods that lies within the production possibilities frontier
A) is currently impossible to produce.
B) is currently possible to produce.
C) represents a more efficient combination of output than anything lying beyond the frontier.
D) represents a more efficient combination of output than anything lying on the frontier.
B
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The ability of diversification to reduce risk
A) is greater the more negatively correlated the two events are. B) is greater the more positively correlated the two events are. C) is greater the more uncorrelated the two events are. D) is greater the more risk averse the individual is.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline