What does the slope of the production possibilities curve represent? Explain
What will be an ideal response?
It represents the trade-off between two goods from two points on the PPC. Specifically, as we move from one point to another, in order to produce more of one good, we must trade-off or give up the other good. If the trade-off is constant, then the slope is constant along the PPC and the PPC is a straight line. If the trade-off increases, then the slope is increasing along the PPC and the PPC is bowed outward.
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The amount by which aggregate spending at full employment exceeds full employment output is known as the:
A. Inflationary gap. B. Recessionary gap. C. Deflationary gap. D. Multiplier effect. E. Crowding out.
Which of the following will not shift the demand curve for grapefruit?
a. An announcement that eating a grapefruit before every meal will induce weight loss. b. A technical development that allows machines to replace the workers who harvest grapefruit. c. An announcement that eating lots of grapefruit causes skin problems. d. A newspaper story reporting that the preference for oranges has skyrocketed. e. An announcement that grapefruit will definitely cost more next week.