Refer to the production possibilities curves below. Curve (a) is the current curve for the economy. Focusing on curve (a), point N suggests that the economy currently produces:
A. More goods for the future than at point P
B. Less goods for the future than at point P
C. Less goods for the present than at point P
D. A combination of output that is less than its potential
Answer: B
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Exchange rates that are allowed to fluctuate in response to changes in supply and demand is known as
A) the foreign exchange markets. B) standard drawing rights. C) fixed exchange rates. D) flexible exchange rates.
Refer to the graphs below. Assume that the economy is initially at equilibrium where AD2 and AS intersect in Graph 1, and also assume that the economy is initially at point C in Graph 2. A movement from point C to point B in graph 2 would most likely be associated, in graph 1, with a shift of:
A. AD to the right
B. AD to the left
C. AS to the right
D. AS to the left