Increases in Resources or Improvements in Technology Will Cause the Production

question 103

Multiple Choice

Increases in resources or improvements in technology will cause the production possibilities frontier to

• A)shift outward
• B)shift inward
• C)become a straight line
• D)become horizontal
• E)become vertical

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Definitions:

Relative Purchasing Power Parity

This economic theory suggests that the exchange rate between two currencies will adjust to reflect changes in the price levels of the two countries, maintaining the purchasing power of each currency.

Expected Inflation

The rate at which prices for goods and services are anticipated to rise over a future period, as forecasted by economists or financial markets.

Relative Purchasing Power Parity

A theory in economics that suggests that changes in the exchange rates between currencies are in direct proportion to changes in the countries' price levels.

Expected Inflation

The predicted average rate at which prices of goods and services rise over time, eroding purchasing power.