Figure 2-7 -Which of the Following Could Explain the Shift in the the Shift

question 34

Multiple Choice

Figure 2-7

-Which of the following could explain the shift in the production possibilities frontier from AB to AC in Figure 2-7?

• A) a productive improvement in petroleum production that has no effect on clothing production
• B) a productive improvement in clothing production that has no effect on petroleum production
• C) an increase in the size of the labor force that can produce either petroleum products or clothing
• D) oil drilling in Alaska is ended in order to protect the environment
• E) major oil reserves are discovered off the coast of Africa

Calculate the velocity of money given the money supply, money demand, and GDP.

Analyze the effect of central banks' monetary policies on the economy during recession periods.

Identify the effects of shifts in the money supply curve on equilibrium value, price levels, and money demand.

Understand the concept of real value of money and how it changes with prices.

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Definitions:

Zero Economic Profits

A situation where a firm's total revenues exactly equal its total costs, indicating no supernormal profit but covering all operating expenses.

Long-Run Equilibrium

A state in which a market's supply and demand balance out over time, with all firms earning normal profit and no incentive for new firms to enter or existing ones to exit.

Price Maker

A firm or entity that has the power to influence the price of goods or services in the market due to a lack of significant competition.

Total Revenue

The overall amount of money generated by a business from selling its goods or services before any costs are subtracted.