Question 1

If the unemployment rate is 5 percent (full employment),our economy is operating

Accepted Answer

Full employment means that all resources (including labor) in the economy are being utilized efficiently. At this level of employment, the economy is producing at its potential, which is represented by the production curve. Therefore, the economy is operating on the production curve.

Question 2

Our nation

Accepted Answer

Our nation has sometimes attained productive efficiency, meaning that at certain times, our economy has been able to produce the maximum amount of goods and services with the given resources and technology. However, it is not a consistent or guaranteed occurrence.

Question 3

Referring to a production possibilities curve and the goods being compared,depict the economic event.The AIDS epidemic becomes rampant in America claiming millions of lives (capital goods vs.consumer goods).

Accepted Answer

The AIDS epidemic, by claiming millions of lives, would reduce the labor force and potentially other resources, leading to a decrease in the nation's ability to produce both capital and consumer goods. This is represented by a leftward shift of the entire production possibilities curve, indicating a reduction in the economy's overall capacity.

Question 4

Referring to a production possibilities curve and the goods being compared,depict the economic event.Assuming the United States was producing at full employment levels in the late 1980s,peace breaks out as the Cold War ends (guns vs.butter).

Accepted Answer

The end of the Cold War and the subsequent reduction in military spending (guns) would allow resources to be reallocated to civilian goods (butter), representing a movement along the production possibilities curve rather than a shift of the curve itself. This is because the economy's resources are being reallocated between two types of goods without necessarily changing the total amount of resources or the economy's capacity to produce.

Question 5

Which of the following is not an institutional constraint that limits our nation's production possibilities?

Accepted Answer

The answer of Which of the following is not an...

Question 6

Statement I.Full employment and full production mean exactly the same thing.
Statement II.You can attain full employment without attaining full production,but you cannot attain full production without attaining full employment.

Accepted Answer

Full employment means that everyone who is willing and able to work is employed. Full production means that the economy is producing as much as it possibly can, given its resources and technology. While full employment and full production are related, they are not the same thing.

Statement I is false because full employment and full production do not mean exactly the same thing.

Statement II is true because it is possible to have everyone who is willing and able to work employed, but have the economy not producing as much as it could be. On the other hand, if an economy is producing as much as it can, given its resources and technology, then it must be at full employment.

Question 7

Referring to a production possibilities curve and the goods being compared,depict the economic event.The bubonic plague (Black Death)in the 1300s killed one-third of Europe's population (capital goods vs.consumer goods).

Accepted Answer

The bubonic plague caused a significant decrease in Europe's population, leading to a decrease in the number of available workers and an overall decline in the economy. This would shift the entire production possibilities curve to the left (inward) as the economy would be able to produce fewer goods and services than before. The goods being compared in this scenario are capital goods (such as factories and tools) and consumer goods (such as food and clothing).

Question 8

Referring to a production possibilities curve and the goods being compared,depict the economic event.The Soviet Union entered World War II at a full employment production level (guns vs.butter).

Accepted Answer

Since the Soviet Union entered World War II at a full employment production level, they had to shift their production from butter to guns. This means they had to move along the production possibilities curve to produce more guns and less butter. Therefore, the answer is E, a movement along the curve.

Question 9

Referring to a production possibilities curve and the goods being compared,depict the economic event.The economy moves from full employment to a serious recession (capital goods vs.consumer goods).

Accepted Answer

Moving from full employment to a serious recession implies a decrease in production and resources available, which would result in a shift inward from the production possibilities curve. Since the question is comparing capital goods versus consumer goods, this would mean a movement from a point near or on the curve that represents a greater production of capital goods (which require more resources and investment) to a point inside the curve that represents a higher production of consumer goods (which require fewer resources and investment).

Question 10

-The unemployment rate falls when we go from

Accepted Answer

The answer of 
-The unemployment rate falls when we go...

Question 11

Referring to a production possibilities curve and the goods being compared,depict the economic event.The SARS epidemic spreads rapidly throughout Toronto,Canada claiming millions of lives (capital vs.consumer goods).

Accepted Answer

The SARS epidemic, by claiming millions of lives, would likely reduce the labor force and possibly disrupt production processes, leading to a decrease in the overall capacity to produce both capital and consumer goods. This is represented by a shift in the entire production possibilities curve to the left (inward), indicating a reduction in the potential output of the economy.

Question 12

-Which of the following will NOT shift an economy's production possibilities curve outward?

Accepted Answer

A reduction in the unemployment rate does not shift the production possibilities curve outward; it moves the economy closer to its existing curve by utilizing idle resources. In contrast, increases in technology, literacy rates, and the number of workers can expand an economy's productive capacity, shifting the curve outward.

Question 13

Referring to a production possibilities curve and the goods being compared,depict the economic event.Computerization in the 1990s launched thousands of new businesses in the United States (capital goods vs.consumer goods).

Accepted Answer

The computerization in the 1990s increased the production efficiency and capacity of businesses, leading to an increase in capital goods production. As a result, the production possibilities curve shifted to the right (outward) to a new efficient frontier, allowing for the production of more consumer goods and capital goods than before. Therefore, there was a shift in the entire curve to the right.

Question 14

Referring to a production possibilities curve and the goods being compared,depict the economic event.Millions of immigrants came to the United States in the second half of the 19th century to work on the transcontinental railroad (capital goods vs.consumer goods).

Accepted Answer

The influx of millions of immigrants to work on the transcontinental railroad would increase the economy's labor force and allow for the production of more capital goods (the railroad itself). This would shift the entire production possibilities curve to the right, indicating an increase in the maximum potential output of both capital goods and consumer goods.

Question 15

Referring to a production possibilities curve and the goods being compared,depict the economic event.The literacy rate increases among workers (capital goods vs.consumer goods).

Accepted Answer

An increase in the literacy rate among workers enhances their productivity, which can lead to an increase in the production of both capital and consumer goods. This is represented by an outward shift of the entire production possibilities curve, indicating that the economy can now produce more of both types of goods than before.

Question 16

If the unemployment rate is 7 percent,our economy is operating

Accepted Answer

The production possibility curve represents the maximum output an economy can produce given its resources and technology. The unemployment rate is an indicator of the percentage of the labor force that is actively seeking employment but cannot find work. If the unemployment rate is 7 percent, it means that 93 percent of the labor force is employed and contributing to the economy's output. However, there is still some unused or underutilized capacity in the economy, which implies that it is operating inside the production possibility curve.

Question 17

Referring to a production possibilities curve and the goods being compared,depict the economic event.Widespread use of the assembly line revolutionizes U.S.industry in the early 20th century (capital vs.consumer goods).

Accepted Answer

The widespread use of assembly lines allowed for an increase in productivity, which would shift the production possibilities curve to the right (outward). This would allow for production of more capital goods (such as machinery for factories) and more consumer goods (such as cars and appliances).

Question 18

Referring to a production possibilities curve and the goods being compared,depict the economic event.The increase in government spending due to World War II pulls the U.S.economy out of a depression to full employment of resources (guns vs.butter).

Accepted Answer

CA movement from a point inside the curve to a point on or near the curve (A) represents the economy moving from underutilization of resources to full employment, which is consistent with the U.S. economy's transition during World War II. Additionally, a shift in the entire curve to the right (outward) (C) indicates an increase in the economy's capacity to produce goods and services, which could result from technological advancements or an increase in resources, including labor mobilization during the war.

Question 19

-If war breaks out and the economy is at full employment,we would move from

Accepted Answer

In a situation where the economy is at full employment and war breaks out, the demand for goods, services, and labor typically increases to support the war effort. This increased demand can push the economy beyond its full employment level, moving it from point X (full employment) to point Y (an overheated economy or beyond full employment), indicating an increase in economic activity and potentially leading to inflationary pressures.

Question 20

Referring to a production possibilities curve and the goods being compared,depict the economic event.Suppose the United States was at full employment in 2003 just before invading Iraq.Although the war was won quickly,winning the peace took a decade (guns vs.butter).

Accepted Answer

The answer of Referring to a production possibilities curve and...

Quiz 2: Resource Utilization

If the unemployment rate is 5 percent (full employment) ,our economy is operating

Our nation

Referring to a production possibilities curve and the goods being compared,depict the economic event.The AIDS epidemic becomes rampant in America claiming millions of lives (capital goods vs.consumer goods) .

Referring to a production possibilities curve and the goods being compared,depict the economic event.Assuming the United States was producing at full employment levels in the late 1980s,peace breaks out as the Cold War ends (guns vs.butter) .

Which of the following is not an institutional constraint that limits our nation's production possibilities?

Statement I.Full employment and full production mean exactly the same thing. Statement II.You can attain full employment without attaining full production,but you cannot attain full production without attaining full employment.

Referring to a production possibilities curve and the goods being compared,depict the economic event.The bubonic plague (Black Death) in the 1300s killed one-third of Europe's population (capital goods vs.consumer goods) .

Referring to a production possibilities curve and the goods being compared,depict the economic event.The Soviet Union entered World War II at a full employment production level (guns vs.butter) .

Referring to a production possibilities curve and the goods being compared,depict the economic event.The economy moves from full employment to a serious recession (capital goods vs.consumer goods) .

-The unemployment rate falls when we go from

Referring to a production possibilities curve and the goods being compared,depict the economic event.The SARS epidemic spreads rapidly throughout Toronto,Canada claiming millions of lives (capital vs.consumer goods) .

-Which of the following will NOT shift an economy's production possibilities curve outward?

Referring to a production possibilities curve and the goods being compared,depict the economic event.Computerization in the 1990s launched thousands of new businesses in the United States (capital goods vs.consumer goods) .

Referring to a production possibilities curve and the goods being compared,depict the economic event.Millions of immigrants came to the United States in the second half of the 19th century to work on the transcontinental railroad (capital goods vs.consumer goods) .

Referring to a production possibilities curve and the goods being compared,depict the economic event.The literacy rate increases among workers (capital goods vs.consumer goods) .

If the unemployment rate is 7 percent,our economy is operating

Referring to a production possibilities curve and the goods being compared,depict the economic event.Widespread use of the assembly line revolutionizes U.S.industry in the early 20th century (capital vs.consumer goods) .

Referring to a production possibilities curve and the goods being compared,depict the economic event.The increase in government spending due to World War II pulls the U.S.economy out of a depression to full employment of resources (guns vs.butter) .

-If war breaks out and the economy is at full employment,we would move from

Referring to a production possibilities curve and the goods being compared,depict the economic event.Suppose the United States was at full employment in 2003 just before invading Iraq.Although the war was won quickly,winning the peace took a decade (guns vs.butter) .