How can fighting inflation cause a recession?
A. The Federal Reserve raises interest rates to intentionally slow down the economy.
B. Businesses lay off workers as a way to keep prices from rising too fast.
C. Households stop buying goods and services in response to higher prices.
D. The federal government orders businesses to reduce prices, which raises interest rates.
Answer: A
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If an economy is producing a level of output that is on its production possibilities curve, the economy
A) has idle resources. B) has idle resources but is using resources efficiently. C) has no idle resources but is using them inefficiently. D) has no idle resources and is using resources efficiently.
Economics deals with choices
A) that involve the wants of individuals. B) that involve what people only need to survive. C) that people make without self-motivated interest. D) that people normally do not make.