The points inside an economy's production possibilities frontier represent the combinations of goods that provide the greatest level of utility to the economy as a whole

If the Fed lowers the federal funds rate, which of the following will NOT happen?

A) The real interest rate falls. B) Other short-term interest rates fall. C) Aggregate demand increases. D) Real GDP increases. E) The price level falls.

In the above figure, Brendan originally consumes at point A. If his income falls and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as

A) B. B) E. C) F. D) G.