If We Are Operating Inside Our Production Possibilities Frontier

question 22

Multiple Choice

If we are operating inside our production possibilities frontier,

• A)it is possible the economy is in a recession.
• B)it is possible the economy is in a depression.
• C)it is possible that the economy is in neither a recession or a depression.
• D)All of the choices are correct.

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Definitions:

Marginal Rate

The rate at which one quantity changes relative to a change in another quantity.

Substitution

The economic principle where consumers replace pricier items with less expensive alternatives when prices rise or their purchasing power decreases.

Indifference Curve

This is a graph representing different bundles of goods between which a consumer is indifferent, meaning that each combination offers the same level of utility to the consumer.

Indifference Curves

Graphical representations in microeconomics showing different bundles of goods between which a consumer is indifferent.