Economics is the study of
A) how to get rich.
B) how people allocate their limited resources to satisfy their unlimited wants.
C) how people spend their income.
D) why people want certain goods and services rather than other goods and services.
Answer: B
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The above figure shows the PPF for a country that produces computers and computer factories. The nation's production possibilities frontier is PPF0. At which of the following production points would the economy grow most rapidly?
A) Point A B) Point B C) Point C D) It makes no difference among the three points because they are all production efficient. E) More information is needed to answer the question.
The aggregate demand curve shifts to the left when the Fed:
A. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function. B. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function. C. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function. D. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.