The Downward-Sloping Line in the Diagram Below Shows the Combinations

question 64

Multiple Choice

The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. FIGURE 1-6
-Refer to Figure 1-6.If the government's spending on health and education is given by point B,a move to point A must involve

• A)less spending on health.
• B)zero opportunity cost.
• C)less spending on education.
• D)less spending in total.
• E)more spending on education.

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Definitions:

Gains and Losses

The financial increases (gains) or decreases (losses) in the value of an asset or investment from its purchase price, typically realized when the asset is sold.

Floating-Rate Debt

A type of debt instrument or loan whose interest payment varies with market interest rates.

Fixed-Rate Debt

A loan or security that has an interest rate that remains constant throughout the life of the loan, providing predictable repayment schedules.