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Unformatted text preview: illustratedby a. boththeproductionpossibilitiesfrontierandthecircular ­flowdiagram. b. neithertheproductionpossibilitiesfrontiernorthecircular ­flowdiagram. c. theproductionpossibilitiesfrontieronly. d. thecircular ­flowdiagramonly.    10. Supposeanationiscurrentlyproducingatapointinsideitsproductionpossibilitiesfrontier.We knowthat a. thenationisproducingbeyonditscapacity,soinflationwilloccur. b. thenationisnotusingallavailableresourcesorisusinginferiortechnologyorboth. c. thenationisproducinganefficientcombinationofgoods. d. therewillbealargeopportunitycostifthenationtriestoincreaseproductionofany good.   11. Whenaneconomyisoperatinginsideitsproductionpossibilitiesfrontier,weknowthat a. thereareunusedresourcesorinefficienciesintheeconomy. b. alloftheeconomy’sresourcesarefullyemployed. c. economicgrowthwouldhavetooccurinorderfortheeconomytomovetoapointon thefrontier. d. inordertoproducemoreofonegood,theeconomywouldhavetogiveupsomeofthe othergood.    12. Itispossibleforaneconomytoincreaseitsproductionofbothgoodsiftheeconomy a. movesdownwardandtotherightalongitsproductionpossibilitiesfrontierandthe frontierisbowedoutward. b. movesupwardandtotheleftalongitsproductionpossibilitiesfrontierandthefrontieris bowedoutward. c. movesineitherdirectionalongitsproductionpossibilitiesfrontierandthefrontierisa straightline. d. movesfromasituationofinefficientproductiontoasituationofefficientproduction.   13. Unemploymentwouldcauseaneconomyto a. produceinsideitsproductionpossibilitiesfrontier. b. produceonitsproductionpossibilitiesfrontier. c. produceoutsideitsproductionpossibilitiesfrontier. d. experienceaninwardshiftofitsproductionpossibilitiesfrontier.    14. Theproductionpossibilitiesfrontierprovidesanillustrationoftheprinciplethat a. tradecanmakeeveryonebetteroff. b. governmentscansometimesimprovemarketoutcomes. c. peoplefacetrade ­offs. d. peoplerespondtoincentives.    15. Theproductionpossibilitiesfrontierillustrates a. thetrade ­offbetweenefficiencyandequality. b. thecombinationofoutputthataneconomyshouldproduce. c. thecombinationofoutputthateachmemberofsocietyshouldconsume. d. Noneoftheaboveiscorrect.    16. Whichofthefollowingtrade ­offsdoestheproductionpossibilitiesfrontierillustrate? a. ifaneconomywantstoincreaseefficiencyinproduction,thenitmustsacrificeequalityin consumption b. onceaneconomyhasreachedtheefficientpointsonitsproductionpossibilitiesfrontier, theonlywayofgettingmoreofonegoodistogetlessoftheother c. foraneconomytoconsumemoreofonegood,...
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