Use the Following to Answer Question

question 146

Multiple Choice

Use the following to answer question:

-(Figure: Production Possibilities and Circular-Flow Diagram) Use Figure: Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital flowing to both coconut producers and fish producers.If all other variables remain unchanged,then the adjustment in this economy would be BEST represented in the production possibilities figure by a movement from point A toward:

• A)point A (no movement).
• B)point B (a decrease in coconut production and an increase in fish production).
• C)point C (a decrease in coconut production).
• D)point D (an outward shift of the entire curve).

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Definitions:

Duration

A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates, often expressed in years.

Perpetuities

A type of annuity that receives an infinite series of identical cash flows with no end.

Deep Discount Bonds

Bonds that are issued at a significantly lower price than their par value, often with higher yields to compensate for the risk.

Price Volatility

The rate at which the price of a security increases or decreases for a given set of returns, indicative of the risk or uncertainty of the security's value over time.