Author Question: Suppose that an economy is currently producing at a point that lies inside of its production ... (Read 114 times)

aabwk4 · **on:** Jun 29, 2018

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set. Which of the following would best explain this circumstance?

A) The prevailing level of technology prevents the economy from producing at a point closer to the frontier of the production possibilities set.
B) The economy does not have enough resources to produce at a point closer to the frontier of the production possibilities set.
C) The economy is experiencing a high level of unemployment.
D) Any of the above statements could explain this situation.
E) None of the above statements could explain this situation.

Question 2

Which of the following produces a movement along the aggregate demand curve and does not shift the aggregate demand curve?

A) a change in government expenditures on goods and services
B) a change in monetary policy
C) a change in the price level
D) a change in foreign incomes
E) a change in expectations about the future