Following Is the Production Possibilities Schedule for an Economy Producing

question 57

Multiple Choice

Following is the production possibilities schedule for an economy producing two goods, Good A and Good B.Table 2.1

-Refer to Table 2.1. Identify the correct statement.

• A)This economy can produce 100 units of A and 20 units of B.
• B)The opportunity cost of producing more of A decreases as A increases.
• C)The opportunity cost of producing more of B decreases as B increases.
• D)This economy can produce 70 units of A and 40 units of B.
• E)If this economy fully and efficiently employs all its resources, it can produce 100 units of A and 80 units of B.

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Definitions:

Inflation

A sustained increase in the general price level of goods and services in an economy over a period of time, usually measured by the consumer price index (CPI).

Countercyclical Intervention

Economic policies or actions taken to counteract the negative effects of economic downturns.

New Classical Economists

A group of economists who believe in the rational expectations theory, advocating that markets generally operate efficiently and that policy interventions often lead to unintended consequences.

Macroeconomic Theory

Macroeconomic theory involves the study and analysis of economy-wide phenomena, including inflation, national income, and unemployment.