Exhibit 2-7

question 184

Multiple Choice

Exhibit 2-7
-Which of the following would cause the production possibilities frontier in Exhibit 2-6 to shift from AA to BA?

• A)a drought that affected food production but had no effect on education
• B)a technological improvement in education that had no effect on food production
• C)a technological improvement in food production that had no effect on education
• D)a disease that affected students' ability to learn (and therefore education) but not food production
• E)an increase in the size of the labor force that affected both food production and education

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Definitions:

Financial Return

The profit or loss generated on an investment over a particular period, expressed as a percentage of the investment's initial cost.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Present Value

The present value of a future amount of money or series of cash flows, discounted at a certain rate of return.

Cash Flows

The total amount of money being transferred into and out of a business, particularly in the context of operating, investing, and financing activities.