If an Economy Is Operating at a Point Inside the Production

question 92

Multiple Choice

If an economy is operating at a point inside the production possibilities frontier, then

• A) economic policy must retard further growth of the economy.
• B) society's resources are being used to produce too many consumer goods.
• C) the PPF curve will shift inward.
• D) society's resources are being inefficiently utilized.

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Definitions:

Capital Goods

Goods that are used in producing other goods and services, rather than being bought by consumers. This includes machinery, buildings, and equipment.

Consumer Goods

Items produced for personal use by households.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors.

Economic Growth

A rise in the output of goods and services in the economy, measured from one time period to another.