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19. An economy can produce video games and houses. If worker productivity improves for video games and remains unchanged for houses then the production possibility curve shifts out and the opportunity cost for video games ? a. Parallel Rises b. Parallel Falls C. Slope changes Falls d. Slope changes Rises

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26 Feb 2018
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Related questions

1) Over the past year, productivity grew 1%, capital grew 4%, and labor grew 2%. If the elasticities of output with respect to capital and labor are 0.5 and 0.5, respectively, how much did output grow? A) 3% B) 4% C) 5% D) 6%

2) In the long-run, an increase in the population growth rate in a steady-state economy will cause A) an increase in capital per worker and an increase in consumption per worker. B) an increase in capital per worker and a decrease in consumption per worker. C) a decrease in capital per worker and a decrease in consumption per worker. D) a decrease in capital per worker and an increase in consumption per worker.

3) You transfer $500 from your checking account to your savings account. What is the overall effect on M1 and M2? A) M1 falls by $500, M2 rises by $500. B) M1 falls by $500, M2 is unchanged. C) M1 rises by $500, M2 is unchanged. D) M1 is unchanged, M2 rises by $500.

4) An increase in the real interest rate on non-monetary assets is likely to cause A) a decline in the real money demand. B) an increase in the real money demand. C) no change in the real money demand. D) no change in the real money demand only if the income elasticity of real money demand is zero.

5) The most liquid asset on this list is A) money. B) bonds. C) houses. D) stocks.

2.7 Construct a production possibilities curve (PPC) for anation facing increasing opportunity costs for producing food andvideo games. Show how the PPC changes given the followingevents.
A. A new and better fertilizer is invented.
B. Immigration occurs, and immigrants’ labor can be employed inboth the agricultural sector and the video game sector.
C. A new programming language is invented that is less costly tocode and is more memory-efficient, enabling the use of smaller gamecartridges.
D. A heat wave and drought result in a 10 percent decrease inusable farmland.

2.9 In response to Senator Creighton's statement reported inProblem 2.8, Senator Long replies, "We must remain at our currentproduction combination if we want to be able to produce moreconsumption goods in the future." Of the labeled points on thediagram, which could depict the future production combinationSenator Long has in mind?

1. For a closed economy, the IS curve describes short-run movements in an economy via which of the following?

a. Interest rate Investment Output
b. Interest rate Investment Output
c. Tax rate Consumption Output
d. Interest rate Investment Output
e. Tax rate Government expenditure Output

2. A key difference between the long run and short-run models is the assumption _____________ in the short run

a. of zero inflation
b. of perfect price flexibility
c. that unemployment always equals its natural rate
d. that the economy never deviates from its long-run equilibrium
e. of sticky inflation (inflexible prices)

3. If prices are sticky and the Fed raises the nominal interest rate (ceteris paribus), __________ and __________ in the short run.

a. the real interest rate remains constant; real output remains at potential
b. the real interest rate falls; short-run real output falls
c. the unemployment rate rises; short-run real output rises
d. the real interest rate rises; short-run real output falls
e. the real interest rate falls; current real output falls

4. According to the Phillips curve, if the current output is above potential output (a boom),

a. inflation rises.
b. inflation falls.
c. unemployment rises.
d. inflation is constant.
e. prices fall.

5. According to the Phillips curve, in general during a recession

a. inflation rises.
b. prices fall.
c. unemployment falls.
d. inflation is constant.
e. inflation falls.

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