The Bowed Shape of the Production Possibilities Frontier Can Be

question 115

Multiple Choice

The bowed shape of the production possibilities frontier can be explained by the fact that

• A)all resources are scarce.
• B)economic growth is always occurring.
• C)the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.
• D)the only way to get more of one good is to get less of the other.

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Definitions:

Unemployment

The situation in which individuals who are capable of working and are actively seeking work but are unable to find a job.

Expected

Something considered likely or anticipated to happen or become a reality in the future.

Potential GDP

The highest level of real GDP that can be sustained over the long term without increasing inflation, assuming full employment of resources.

Expansionary Policy

A macroeconomic policy that aims to stimulate the economy by increasing government spending, decreasing taxes, or lowering interest rates to boost economic activity.