Refer to the Above Diagram

question 48

Multiple Choice

Refer to the above diagram.Curve (a) is the current production possibilities frontier for the economy.Other things being equal, society's current choice of point P on curve (a) means:

• A)more rapid economic growth compared to choosing point N.
• B)a slower rate of economic growth compared to choosing point N.
• C)the same rate of growth as would occur if point N were chosen.
• D)it is unachievable because it exceeds the productive capacity of the economy.

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Definitions:

National Debt

The total amount of money that a country's government has borrowed from various sources.

Functional Finance

An economic theory that prioritizes achieving full employment and stable pricing over balancing budgets.

Potential GDP

The maximum possible level of output an economy can produce without triggering inflation, assuming full employment and optimal use of resources.

Fiscal Policy

Government policies on taxation and spending that are used to influence the economy.