If an Economy Uses Its Resources Inefficiently, This Situation Would

question 24

Multiple Choice

If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as

• A) an inward shift of the production possibilities curve.
• B) an outward shift of the production possibilities curve.
• C) operating at a point outside the production possibilities curve.
• D) operating at a point inside the production possibilities curve.

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Definitions:

Contract Rate

The agreed-upon rate for interest or currency exchange in a financial contract between parties.

Market Rate

The prevailing interest rate available in the marketplace for loans or deposits of a specific maturity.

Contractual Interest Rate

The interest rate specified in a loan agreement or bond indenture.

Issued Discount

A reduction from the nominal or face value of a security at the time it is issued.