The bowed-out-from-the-origin shape of the production possibilities curve occurs because resources are
a. equally well-suited to production of both goods
b. not being used efficiently
c. not always of equal quality and some are better suited to the production of one type of good than others
d. increasing as more of one good is produced
e. of an increasingly inferior quality
C
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In the above figure, when income is zero, household expenditures equal
A) 0. B) $1000. C) $4000. D) $8000.
Which of the following best explains how an economy could simultaneously experience high inflation and high unemployment?
A) The government increases spending without increasing taxes B) The government increase taxes without increasing spending C) Inflationary expectations decline D) Women and teenagers stay out of the labor force E) Negative supply shocks cause factor prices to increase