The shape of the production possibilities curve in the above figure indicates that
A) production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs.
B) production of both corn and cloth is characterized by increasing costs.
C) production of both corn and cloth is characterized by constant costs.
D) production of corn is characterized by constant costs and the production of cloth is characterized by increasing costs.
B
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Suppose the U.S. dollar price of the Euro falls. This means that
A) the U.S. exchange rate has risen and the U.S. dollar buys more euros. B) the U.S. exchange rate has risen and the U.S. dollar buys less euros C) the U.S. exchange rate has fallen and the U.S. dollar buys more euros. D) the U.S. exchange rate has fallen and the U.S. dollar buys less euros.
According to the new classical macroeconomists, each of the following statements is true EXCEPT:
A) Disinflation will be harder to bring about because of the time-inconsistency problem. B) Policymakers are tempted to deviate from the preannounced policy once the public changes its expectations. C) Feedback rules are preferred to discretionary rules. D) Disinflation will be painless if the restrictive policies announced by the government are credible.