If an economy is operating __________ its institutional production possibilities frontier,it is producing __________ output than it would be at full employment.
A) below; less
B) below; more
C) above; less
D) above; more
E) a and d

Question

Quizplus · Accepted Answer

The correct answers are A and D because when an economy is operating below its production possibilities frontier, it is not utilizing all available resources efficiently, leading to less output than at full employment. Conversely, operating above the frontier suggests an overutilization of resources or an unsustainable level of production, potentially leading to more output in the short term but is not typically considered feasible or sustainable.

If an Economy Is Operating __________ Its Institutional Production Possibilities