Which of the following would result in a movement along the production possibilities curve?
A) a fall in the unemployment rate
B) growth in the capital stock
C) population growth
D) a change in the composition of two goods that a society chooses to produce
D) a change in the composition of two goods that a society chooses to produce
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Refer to Figure 16-1. Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A) A to E. B) A to B. C) B to A. D) B to C. E) C to B.
Recently, there has been talk about reforming the tax system. Some advocate replacing the current income tax with a consumption tax. The income tax taxes interest earned on savings directly, while a consumption tax doesn't. The most likely effect on savings, if there is a shift to the consumption tax, would be to
a. raise interest rates b. shift the supply curve of loanable funds to the left c. encourage higher consumption d. shift the supply curve of loanable funds to the right e. discourage savings