Suppose There Are Two Economies,Alpha and Beta,which Have the Same

question 68

Multiple Choice

Suppose there are two economies,Alpha and Beta,which have the same production possibilities curves and are on the same point on each curve.If Beta then devotes more resources to investment goods than consumer goods when compared to Alpha,then in the future:

• A) Alpha will experience greater economic growth than Beta.
• B) Beta will experience greater economic growth than Alpha.
• C) Alpha will not be able to achieve full employment or productive efficiency.
• D) Beta will not be able to achieve full employment or productive efficiency

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Definitions:

Nominal GDP

The market value of all finished goods and services produced within a country in a year, measured in current prices.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by an economy in real terms.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to adjust nominal GDP to real GDP.

Inflation Rate

The frequency at which the overall price of goods and services inflates, reducing the effectiveness of the purchasing capacity.