A point outside the production possibilities curve represents a combination of goods that is:

A point outside the production possibilities curve represents a combination of goods that is:
 a. inefficient. b. efficient.
  c. unattainable. d. attainable.

QUESTION 2

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. As long as our resources were being used efficiently, the production possibilities curve would suggest that:
 a. we will have to give up the production of other goods that could have been produced with these resources.
  b. we will be able to produce the same amount of other goods as before.
  c. the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift.
  d. we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology.

QUESTION 3

Which of the following is true of the production possibilities curve?
 a. It assumes a fixed level of technology. b. It assumes resources are fixed.
  c. It assumes resources are fully employed. d. All of these are correct.

QUESTION 4

Which of the following most accurately indicates the implications of an economy's production possibilities curve?
 a. If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
  b. If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods.
  c. Over time, it is generally impossible for a country to expand its production of goods.
  d. An economy will automatically move toward a point that lies outside of the production possibilities constraint unless proper government policy constrains production.

QUESTION 5

If an economy is operating at a point inside the production possibilities curve,
 a. its resources are not being used efficiently.
  b. the curve will begin to shift inward.
  c. the curve will begin to shift outward.
  d. This is a trick question because an economy cannot produce at a point inside the curve.