"If Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer
What will be an ideal response?
The statement is true. Points within the production possibilities frontier are attainable, so it is possible for Mexico to be producing at a point within its frontier. At points within the production possibilities frontier, there are unemployed or misallocated resources.
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The earned-income tax credit:
A. increases the personal income tax liability of low-income working families. B. provides a cash payment to low-income working families if their tax credit exceeds their tax liability. C. is designed to make labor force employment less attractive. D. was eliminated as part of welfare reform in 1996.