If an economy is producing at a point on the production possibilities curve it represents:
a. full employment of existing resources.
b. the gains from trade that an economy can enjoy
c. the maximum amount of two goods that can be produced with existing resources.
d. decreasing opportunity costs of producing both goods.
e. overutilization of existing resources.
a
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Suppose that the nominal exchange rate is .80 euro per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Germany is 400 Euro. Suppose that these values change to .90 euro per dollar, $600, and 600 euro. Then the real exchange rate would
a. appreciate which by itself would make U.S. net exports fall. b. appreciate which by itself would make U.S. net exports rise. c. depreciate which by itself would make U.S. net exports fall. d. depreciate which by itself would make U.S. net exports rise.
Refer to the graph below for a purely competitive firm operating at a loss in the short run. Which of the following changes in its market would allow the firm to earn positive profits again?
A. An increase in the market demand
B. An increase in the wages of workers in the industry
C. A decrease in the price of raw materials used by firms in the industry
D. A decrease in the price of the industry's product