Graphically express a production possibilities curve. What do points on, inside and outside the curve represent? What does a rightward shift of the curve represent? How is economic growth expressed in terms of the production possibilities model?
The production possibilities curve will bow out from the origin. A point on the curve represents efficiency. A point inside represents inefficiency. A point outside the curve is currently unattainable (it is a combination of production we cannot currently produce given our limited resources and technology; although that point may be attainable if we acquire more resources, technology, or generally increase our production possibilities). A rightward shift in the curve represents an increase in production possibilities. Because economic growth means an increase in a nation's production possibilities over time, then it is expressed as a rightward shift of the production possibilities curve.
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If the Fed lends to member banks, what happens to reserves and the money supply?
A. Reserves increase and the money supply decreases. B. Both increase. C. Reserves decrease and the money supply increases. D. Both decrease.
For some products, quality is virtually impossible to determine prior to purchase. If sellers of such commodities are rational, they will cheat or engage in unethical behavior only when:
A. production exhibits positive externalities. B. laws allow unethical behavior. C. the expected gains are greater than the expected costs. D. the expected gains are equal to the expected costs.