Which of the following is the most accurate example of the working of the free market?
a. A government agency orders increased production of wheat bread.
b. A CEO increases the production of various sport cars based on the demand for these cars in several small towns.
c. The soaring demand of millions of consumers causes numerous companies to increase the supply of HD televisions.
d. The increased demand for Choco Bars by people older than 80 causes the manufacturer to increase production slightly.
c. The soaring demand of millions of consumers causes numerous companies to increase the supply of HD televisions.
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The table above gives the production possibilities frontier for two countries, Anaconda and Bear. The opportunity cost of moving from production point B to production point C for Anaconda equals ________ and for Bear equals ________
A) 50 pairs of shoes; 100 pairs of shoes B) 100 pairs of shoes; 200 pairs of shoes C) 1 ton of corn; 1 ton of corn D) 550 pairs of shoes; 700 pairs of shoes E) 650 pairs of shoes; 900 pairs of shoes
Suppose that inflation is at the target rate and output has fallen substantially below potential output. A central bank with a primary objective of price stability should ________
A) do nothing, because inflation cannot rise when unemployment is high B) ease monetary policy, to avoid a decrease in the inflation rate C) do nothing, because stabilizing economic activity is not a primary objective D) ease monetary policy, because avoiding high unemployment is more important than avoiding high inflation E) none of the above