Which of the following will not shift the production possibilities curve outward?
a. an improvement in technology, which increases the efficiency of inputs
b. the discovery of significant oil reserves in Alaska
c. a decrease in capacity utilization of existing factories
d. additions to the stock of physical capital
Question 2The four major components of aggregate demand are consumption, investment, government purchases of goods and services, and net exports.
a. True
b. False
Indicate whether the statement is true or false
Question 3A supply curve slopes downward because of the law of supply.
a. True
b. False
Indicate whether the statement is true or false
Question 4Which of the following would not shift the production possibilities curve in an inward direction?
a. a sharp increase in the unemployment rate
b. a decrease in the capital stock
c. land is contaminated due to a nuclear meltdown
d. a devastating war destroys both property and people
Question 5List the various reasons that contributed to the financial crisis that occurred in 2008.
Question 6A sharp increase in gasoline prices will cause the supply curve for trucking services to shift to the right.
a. True
b. False
Indicate whether the statement is true or false
Question 7Assume the economy moves from a situation with full employment to one in which the unemployment rate is higher. This can be portrayed as:
a. an inward shift of the production possibilities curve.
b. an outward shift of the production possibilities curve.
c. a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve.
d. a movement from a point on the production possibilities curve to a point inside the production possibilities curve.
Question 8Explain how a consumption tax could lead to a decrease in real interest rates.
Question 9Assume that the supply curve for tomatoes is upward sloping. If the price per pound increases from 0.99 to 1.89, a greater quantity of tomatoes will be supplied to the market.
a. True
b. False
Indicate whether the statement is true or false
Question 10A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as:
a. an inward shift of the production possibilities curve.
b. an outward shift of the production possibilities curve.
c. a movement down and to the right along the production possibilities curve.
d. a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve.
Question 11Would a relatively high P/E ratio lead us to conclude that a stock is overvalued or undervalued? Why or why not?
Question 12According to the law of supply, if the price of calculators decrease, the supply of calculators will decrease, everything else held constant.
a. True
b. False
Indicate whether the statement is true or false
Question 13An increase in the unemployment rate from 15 percent to 20 percent might be illustrated as:
a. a movement up and to the left from one point along the production possibilities curve to another.
b. a movement from a point on the production possibilities curve to an interior point.
c. a movement from an interior point to a point on the production possibilities curve.
d. a movement from a point inside the production possibilities curve to one closer to the origin.
Question 14Why are real interest rates more important than nominal interest rates with regard to analyzing the supply and demand of loanable funds?
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