Exhibit 15.1

At the Plaza Accord of 1985, the Group-of-Five nations agreed to drive the value of the dollar downward (i.e., depreciation) so as to help reduce the U.S. trade deficit. Answer the following question(s) on the basis of this information.
-In Figure 2.3, one ton of wheat can be produced at a cost of
A) one and two-thirds cars.
B) two and one-third cars.
C) three fifths of a car.
D) three sevenths of a car.

Question

Exhibit 15.1

At the Plaza Accord of 1985, the Group-of-Five nations agreed to drive the value of the dollar downward (i.e., depreciation) so as to help reduce the U.S. trade deficit. Answer the following question(s) on the basis of this information.
-In Figure 2.3, one ton of wheat can be produced at a cost of
A) one and two-thirds cars.
B) two and one-third cars.
C) three fifths of a car.
D) three sevenths of a car.

Quizplus · Accepted Answer

The slope of the production possibilities frontier represents the opportunity cost of one good in terms of the other. The slope of this PPF is -3/5, meaning that in order to produce an additional ton of wheat, 3/5 of a car must be given up. Therefore, one ton of wheat can be produced at a cost of 3/5 of a car.

Exhibit 15.1 At the Plaza Accord of 1985, the Group-Of-Five Nations Agreed