The production possibilities curve has a negative slope because
a. producing more of one good means producing less of the other
b. efficiency declines as more of one good is produced
c. consumers want to buy more of a good as its price decreases
d. it becomes harder to find workers as more goods are produced
e. the law of increasing costs is violated
A
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In January 2009, the President submitted a bill to Congress in order to stimulate the economy and increase employment. The legislation was passed in March 2009, and the spending occurred from June 2009 to March 2011. As a result
A) the full effect of the fiscal policy change would not be felt until after March 2011 because of the effect time lag. B) the full effect of the fiscal policy change would not be felt until after March 2011 because of the recognition time lag. C) the full effect of the fiscal policy change would be felt by March 2011 because people anticipated the spending and changed their behavior accordingly. D) the full effect of the fiscal policy change would be felt when the last of the funds were spent by the government.
Answer the following statement(s) true (T) or false (F)
1.Economists who believe that, in the short run, discretionary monetary and fiscal policy can stimulate a recessionary economy with aggregate demand management are known as activists. 2.Expansionary fiscal policy is usually effective at correcting for negative supply shocks. 3.Between 1999 and 2004, inflation was low but housing prices were increasing very rapidly. 4.The use of payment contracts that automatically adjust for changes in inflation is known as indexing. 5.Indexing is an effective method for preventing rises in the inflation rate.