Author Question: Suppose Freeland produces few consumption goods and many investment goods while Liberty Nation ... (Read 137 times)

formula1 · **on:** Jun 30, 2018

Suppose Freeland produces few consumption goods and many investment goods while Liberty Nation produces few investment goods and many consumption goods. Other things equal, you would expect
a. per capita income to grow more rapidly in Liberty Nation.
b. population to grow faster in Liberty Nation.
c. the production possibilities curve for Freeland will shift out more rapidly than that of Liberty Nation.
d. that if both countries started with identical production possibilities curves, in twenty years, people in Liberty Nation will be able to produce more consumer goods than people in Freeland.

Question 2

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.
a. True
b. False
Indicate whether the statement is true or false