A Country's Consumption Possibilities Frontier Can Be Outside Its Production

question 171

Multiple Choice

A country's consumption possibilities frontier can be outside its production possibilities frontier if

• A)the country's technology is superior to the technologies of other countries.
• B)the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries.
• C)the country engages in trade.
• D)All of the above are correct.

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Definitions:

Federal Funds Rate

The borrowing cost at which financial institutions lend and borrow federal funds (reserves at Federal Reserve Banks) from each other overnight.

Interest Rate

Interest rate is the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Fractional-reserve Banking

A banking system where banks hold only a fraction of their deposits in reserve, lending the rest to generate profits.

Money Supply

The collective volume of monetary assets within an economy at a certain point, including cash, coins, and balances in checking and savings accounts.