Suppose That an Economy Is Initially Operating at a Point

question 205

Multiple Choice

Suppose that an economy is initially operating at a point on its PPC. If it then experiences an expansion in its production capacity, but its total spending does not rise as fast as its capacity, the
Economy will end up

• A) still on its production possibilities curve.
• B) outside its production possibilities curve.
• C) inside its production possibilities curve.
• D) on one of the axes of its production possibilities curve.

---

Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Related Asset

An asset that is related to or necessary for the operation or function of another asset.

Wages Expense

Wages expense refers to the total cost incurred by a business for paying salaries or wages to its employees over a specific period.

Wages Payable

A liability account that records the amount of wages earned by employees but not yet paid by the company.