Compare Two Economies a and B That Start Out with Identical

question 86

Multiple Choice

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:

• A) economy A will operate inefficiently.
• B) economy B will operate inefficiently.
• C) economy A and economy B will grow equally fast.
• D) economy A will grow faster than economy B.
• E) economy B will grow faster than economy A.

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Definitions:

Drawee Bank

A bank upon which a check or draft is drawn and is responsible for paying the amount to the individual or entity presenting it for payment.

Agent

A person authorized to act on behalf of another, known as the principal, in business transactions or other matters.

Stop Payment Order

A request made to a financial institution to cancel or halt the processing of a check or payment transaction.

Competitive Equality Banking Act

A U.S. law aimed at promoting competition among banks and equalizing regulatory standards across different types of banking institutions.