A Technological Improvement Can Cause the Production Possibilities Curve to Shift

question 223

Multiple Choice

A technological improvement can cause the production possibilities curve to shift outward because

• A) it increases costs and contributes to lower production rates.
• B) maximum feasible outputs of both goods increase.
• C) production will fall, but jobs will be saved.
• D) it causes increases in unemployment.

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Definitions:

Keynesians

Economists who follow the theories of John Maynard Keynes, emphasizing the role of government intervention and fiscal policy in managing economic cycles.

Monetarists

Economists who suggest that fluctuations in the money supply are key in affecting national output in the short term and in determining the price level over an extended term.

Crowding-Out Effect

The phenomenon where increased government spending leads to a reduction in private sector spending and investment due to higher interest rates or other factors.

Government Spending

The total amount of public expenditure by a government, including spending on defense, education, public infrastructure, and welfare programs.