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HW105_01 - Econ 105 Principles of Macroeconomics Homework...

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1 Econ 105: Principles of Macroeconomics Homework Assignment 01 1. True or False?: “Points outside a production possibility frontier can be achieved but they are inefficient.” ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 2. Here’s a statement of one expert made 2 years ago about massive forest fires in California: “Fires are good for our economy. We need people to rebuild what’s burned now – it will increase employment and GDP.” He could be right if a) California’s economy operated at an inefficient point on the production possibility frontier; b) California’s economy operated at an inefficient point inside the production possibility frontier; c) California’s economy operated at an inefficient point outside the production possibility frontier; d) Increase in employment shifts the production possibility frontier out; e) Increase in employment shifts the production possibility frontier up.
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