"If Mexico is currently operating at a point beyond its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer
What will be an ideal response?
The statement is false. It is false on two counts. First, production points beyond the production possibilities frontier are unattainable, so it is not possible for Mexico to be producing at such a point. Second, points within not beyond the production possibilities frontier have unemployed resources.
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Which of the following stands true for income inequality?
a. The benefits of increased economic growth are widely shared in the First World countries. b. As a result of globalization, income inequality in China has decreased. c. The decrease in income inequality in China is an effect of socialist policies in that country. d. The gap between rich countries and globalized developing countries has shrunk. e. Internal migration has played a big role in reducing the income inequality in China.
Friedman and Phelps argued
a. that in the long run, monetary growth did not influence those factors that determine the economy's unemployment rate. b. that the Phillips curve could be exploited in the long run by using monetary, but not fiscal policy. c. that the short-run Phillips curve was very steep, but not vertical. d. that there was neither a short-run nor long-run tradeoff between inflation and unemployment.