Macro Chapter 2

C

If the slope of the PPF is the same between any two points, what does this relationship imply about costs? A. There are increasing opportunity costs of production. B. Scarcity exists. C. There are constant opportunity costs of production. D. Efficiency exists. E.There are decreasing opportunity costs of production.

B

In order for a nation's PPF to be _____, resources must be somewhat specialized, so that the law of increasing opportunity cost holds. A. Straight line B. Bowed out

A

In order for a nation's PPF to be ______, there must be complete interchangeability of resources. A. Straight line B. Bowed out

B: Represented by the slope of the frontier or can be viewed as how much we give up of one good to get one more unit of another good.

Opportunity cost would be represented by... A. The Frontier of the PPF B. The Slope of the PPF C. Points Along the Frontier D. Points Beyond the PPF E. Points Below the PPF

C

Productive efficiency would be represented by... A. The Frontier of the PPF B. The Slope of the PPF C. Points Along the Frontier D. Points Beyond the PPF E. Points Below the PPF

C

Suppose a nation's PPF shifts inward as its population grows. What happens, on average, to the material standard of living of the people? A. It rises. B. It stays the same. C. It declines.

E: Unemployed resources and productive inefficiency are illustrated by a point below the PPF

Unemployed Resources would be represented by... A. The Frontier of the PPF B. The Slope of the PPF C. Points Along the Frontier D. Points Beyond the PPF E. Points Below the PPF

A

What exactly allows individuals to consume more if they specialize and trade than if they don't? A. The fact that each person specializes in producing what he or she can produce at lower cost is what "releases" resources to produce more goods, which then leads to greater consumption. B. When people specialize, overall resources increase. C. People specialize in the production of a good for which they have the highest opportunity cost.

D

What will a technological change that makes resources less specialized do to a bowed-outward PPF? A. It will shift outward. B. It will become more bowed outward. C. It will shift inward. D. It will become straighter relative to the origin.

A

What will an increase in population do to a PPF? A. It will move it outward. B. It will move in inward. C. It will move it outward more on only one axis. D. It will move it inward more on only one axis.

B

Why are most production possibilities frontiers for goods bowed outward (concave downward)? A. It is difficult to achieve productive efficiency. B. The law of increasing opportunity cost holds. C. Opportunity costs are constant. D. There are mostly decreasing opportunity costs of production.

A: Represents an addition to the country's resources; therefore, the PPF would shift outward.

The discovery of a new oil field would affect the U.S. PPF to ___. A. Shift Outward B. Shift Inward C. Movement to a Point Closer to the Frontier D. Movement to a Point Inside the Frontier

1) C 2) B

The extreme point on the vertical axis of a PPF is identified by figuring out how much of the good on that axis can be produced using __1___ of the economy's resources. Once the extreme point on the vertical axis has been identified, other points on the PPF can be identified by asking how much of that good must be __2__ in order to increase production of the good on the horizontal axis by some discrete amount. 1) A. Some B. Half C. All D. None 2) A. Produced B. Given up

C: A decrease in the unemployment rate would be represented by movement from a point below the PPF to another point closer to or on the frontier.

A decrease in the unemployment rate would affect the U.S. PPF to ___. A. Shift Outward B. Shift Inward C. Movement to a Point Closer to the Frontier D. Movement to a Point Inside the Frontier

D: Decrease the productive efficiency of labor, thereby moving the economy from a point on or inside the frontier to another point further inside the frontier.

A law that requires individuals to enter lines of work for which they are not suited would affect the U.S. PPF to ___. A. Shift Outward B. Shift Inward C. Movement to a Point Closer to the Frontier D. Movement to a Point Inside the Frontier

B: Removes individuals, capital, and potentially other resources from the productive process; therefore, ceteris paribus, the PPF would shift inward.

A war that takes place on U.S. soil would affect the U.S. PPF to ___. A. Shift Outward B. Shift Inward C. Movement to a Point Closer to the Frontier D. Movement to a Point Inside the Frontier

A: Ceteris paribus will increase the available productive human resources of the economy; therefore, the PPF should shift outward.

An increase in the number of illegal immigrants would affect the U.S. PPF to ___. A. Shift Outward B. Shift Inward C. Movement to a Point Closer to the Frontier D. Movement to a Point Inside the Frontier

A: Illustrated by the frontier itself: if there were unlimited resource availability, there would be no limit on output.

The finiteness of resources implicit in the scarcity condition would be represented by... A. The Frontier of the PPF B. The Slope of the PPF C. Points Along the Frontier D. Points Beyond the PPF E. Points Below the PPF

C: Illustrated by possible combinations along the frontier: there is not a single optimum or efficient combination of the two goods.

Choice would be represented by... A. The Frontier of the PPF B. The Slope of the PPF C. Points Along the Frontier D. Points Beyond the PPF E. Points Below the PPF

A

Consider a straight-line production possibilities frontier (PPF) with domestic welfare goods and services on the horizontal axis and national defense goods and services on the vertical axis. Two people disagree as to where on the frontier itself the economy should be located. Which of the following statements is true given this scenario? A. The person who wants more national defense will prefer the economy to move to the northwest along the frontier. B. The person who wants more national defense will prefer the economy to move to the southeast along the frontier. C. The person who wants more domestic welfare will prefer the economy to move to the northwest along the frontier. D. The person who wants more domestic welfare will prefer that the economy stays where it is on the frontier.