Question 1

Use the following to answer question Figure: Interpreting PPF Shifts -(Figure: Interpreting PPF Shifts)According to the graph,which of the following changes may cause the production possibilities frontier to shift inward from PPF₁ to PPF₀?

Accepted Answer

Increasing government regulation on businesses overall can lead to inefficiencies and reduced production capacity, causing the production possibilities frontier to shift inward.

Question 2

Use the following to answer question 
Figure: Interpreting PPF Shifts 3
-(Figure: Interpreting PPF Shifts 3)Which of the following would NOT be a possible explanation for the shift depicted in the graph?

Accepted Answer

An increase in unemployment would not result in a shift outward of the PPF, as it represents a reduction in available resources for production.

Question 3

Economic growth is shown as a:

Accepted Answer

Economic growth is depicted by a shift to the right of the PPF since it shows an increase in the productive capacity of an economy, resulting in an expansion in the maximum output possibilities.

Question 4

Use the following to answer question 
Figure: Determining Production Possibilities 2
-(Figure: Determining Production Possibilities 2)Which point in the graph is consistent with a recession?

Accepted Answer

Point a is consistent with a recession because it represents an underutilization of resources, indicating that the economy is producing inside the production possibilities frontier.

Question 5

Economic growth is shown as a:

Accepted Answer

Economic growth is represented by an outward shift of the PPF, which means the economy is able to produce more goods and services with the same level of resources. This indicates an increase in productivity, technology, or resources, leading to an increase in potential output. Thus, Option B is the correct answer as it represents a shift to the right in the PPF.

Question 6

The increased participation of women in the work force:

Accepted Answer

The increased participation of women in the work force has contributed to the rate of economic growth. This is because it results in a larger labor force, which can lead to increased productivity and output. Additionally, the shift in the structure of the work force toward services (as mentioned in choice A) can also lead to growth, as these sectors tend to be more productive and innovative. Option B is incorrect since women's participation in the work force has been shown to increase economic growth, and option D is incorrect because the PPF curve would shift to the right due to increased productivity and output from a larger labor force.

Question 7

Which is NOT a source of economic growth?

Accepted Answer

Reducing the level of international trade would actually hinder economic growth by limiting access to new markets and reducing competition. Increasing business investment and research and development both lead to innovation and productivity, while reducing the variability of inflation helps to create a stable economic environment.

Question 8

Which of the following MOST likely to cause the production possibilities frontier to shift to the right?

Accepted Answer

An increase in technology would most likely cause the production possibilities frontier to shift to the right, as it would allow for more efficient production and the ability to produce more goods and services using the same amount of resources. An increase in consumption (B) would theoretically lead to a shift to the left, as more resources are being used for consumption and less for production. An increase in producer prices (C) may incentivize more production, but would not necessarily lead to an expansion of production possibilities. An increase in tax revenues (D) may provide more resources for the government or private sector, but would not directly impact the production possibilities frontier.

Question 9

Which of the following results in a higher standard of living?

Accepted Answer

Higher levels of education lead to a more skilled and informed workforce, which in turn leads to higher productivity, innovation, and economic growth. This ultimately results in a higher standard of living for individuals in the society. Higher tax rates and inflation rates may have negative impacts on economic growth and individuals' purchasing power, while a decrease in trade exposure may lead to limited access to goods and services from other countries, potentially limiting economic growth and innovation.

Question 10

Use the following to answer questions 
Figure: Pork and Corn PPF 2
-(Figure: Pork and Corn PPF 2)The opportunity cost of producing a unit of pork is _____ unit(s)of corn.

Accepted Answer

The opportunity cost of producing a unit of pork is 5 units of corn. This is because the PPF shows that if the economy produces 1 unit more of pork, it must give up 5 units of corn.

Question 11

A country can use its given resources to produce capital goods or consumer goods.This implies that:

Accepted Answer

The given resources of a country can be utilized to produce either capital goods or consumer goods. However, producing more of one type of good means producing less of the other. This creates a tradeoff between the current and the future standard of living. If a country chooses to invest in capital goods, it might benefit in the future with higher economic growth and a higher standard of living. However, if it chooses to produce more consumer goods in the present, it may enjoy greater immediate consumption but at the expense of future growth and a lower standard of living in the future. Therefore, the best answer is D.

Question 12

Suppose that the government could stimulate spending in one of the following expenditure categories.In which of these categories would the spending increase contribute most to an expansion of production possibilities?

Accepted Answer

Investment in capital goods increases the economy's capacity to produce goods and services. By increasing the stock of physical and human capital, investment in capital goods increases productivity, which leads to an expansion of production possibilities. In contrast, spending on consumption goods, government purchases, and net exports may stimulate growth in the short term but do not increase the economy's capacity to produce in the long term.

Question 13

Which of the following would be MOST likely to cause the production possibilities frontier to shift to the left?

Accepted Answer

A decrease in the size of the labor force would decrease the economy's ability to produce goods and services, causing the production possibilities frontier to shift to the left. An increase in population, a technological advance, or a decrease in taxes would all increase the economy's ability to produce goods and services, causing the production possibilities frontier to shift to the right.

Question 14

If a society's production possibilities frontier shifts to the right:

Accepted Answer

When a society's production possibilities frontier shifts to the right, it means that the society can produce more goods and services than before with the same amount of resources. This allows the society to increase its standard of living by consuming more goods and services. Therefore, choice A is the best answer. Choice B is not necessarily true because the society can still choose the same mix of goods as before or a different mix. Choice C is also not necessarily true because the society can increase the production of all industries without decreasing that of others. Choice D is not true because the society can achieve the increase in production possibilities by improving the productivity of its resources rather than acquiring more resources.

Question 15

Use the following to answer question 
Figure: Determining Production Possibilities 3
-(Figure: Determining Production Possibilities 3)According to the graph,output combination represented by the diamond can be achieved only:

Accepted Answer

The output combination represented by the diamond is outside the current production possibilities frontier, indicating that it can only be achieved if more resources are acquired, thus expanding the frontier.

Question 16

A country's GDP is inside the frontier of the production possibility frontier.This could happen because of:

Accepted Answer

If a country is inside the production possibility frontier, it means that it is operating below its maximum potential production level. This could happen during a recession when there is reduced demand for goods and services, leading to lower production levels. Technological change, economic growth, or lack of land resources would shift the production possibility frontier, but would not result in a country operating within the frontier.

Question 17

Which are the principal resources that can be changed through government action?

Accepted Answer

The two principal resources that can be changed through government action are capital and labor. The government can influence the availability of capital through fiscal policy, such as issuing bonds or changing tax rates, and can regulate labor through policies such as minimum wage laws and workplace safety regulations. While entrepreneurial ability and land are important factors of production, they are less influenced by direct government action.

Question 18

An increase in the quantity and/or quality of labor available could be due to each of the following,EXCEPT:

Accepted Answer

Strict immigration policy enforcement would actually decrease the quantity of labor available, as it would limit the number of foreign workers entering the workforce. A, B, and D would all increase the quantity and/or quality of labor available.

Question 19

Which of the following can lead to a decrease (leftward shift)in the PPF?

Accepted Answer

Banning a technology due to its adverse environmental effects can lead to a decrease in the PPF as it limits the production possibilities of certain goods and services that were previously possible with that technology.

Question 20

Use the following to answer question 
Figure: Interpreting PPF Shifts 2
-(Figure: Interpreting PPF Shifts 2)The graph describes a situation in which:

Accepted Answer

Only Industry 2 has had a technological improvement because the PPF has shifted outward for Industry 2, but not for Industry 1.

Quiz 2: Production, Economic Growth, and Trade

Use the following to answer question Figure: Interpreting PPF Shifts -(Figure: Interpreting PPF Shifts) According to the graph,which of the following changes may cause the production possibilities frontier to shift inward from PPF₁ to PPF₀?

Use the following to answer question Figure: Interpreting PPF Shifts 3 -(Figure: Interpreting PPF Shifts 3) Which of the following would NOT be a possible explanation for the shift depicted in the graph?

Economic growth is shown as a:

Use the following to answer question Figure: Determining Production Possibilities 2 -(Figure: Determining Production Possibilities 2) Which point in the graph is consistent with a recession?

Economic growth is shown as a:

The increased participation of women in the work force:

Which is NOT a source of economic growth?

Which of the following MOST likely to cause the production possibilities frontier to shift to the right?

Which of the following results in a higher standard of living?

Use the following to answer questions Figure: Pork and Corn PPF 2 -(Figure: Pork and Corn PPF 2) The opportunity cost of producing a unit of pork is _____ unit(s) of corn.

A country can use its given resources to produce capital goods or consumer goods.This implies that:

Suppose that the government could stimulate spending in one of the following expenditure categories.In which of these categories would the spending increase contribute most to an expansion of production possibilities?

Which of the following would be MOST likely to cause the production possibilities frontier to shift to the left?

If a society's production possibilities frontier shifts to the right:

Use the following to answer question Figure: Determining Production Possibilities 3 -(Figure: Determining Production Possibilities 3) According to the graph,output combination represented by the diamond can be achieved only:

A country's GDP is inside the frontier of the production possibility frontier.This could happen because of:

Which are the principal resources that can be changed through government action?

An increase in the quantity and/or quality of labor available could be due to each of the following,EXCEPT:

Which of the following can lead to a decrease (leftward shift) in the PPF?

Use the following to answer question Figure: Interpreting PPF Shifts 2 -(Figure: Interpreting PPF Shifts 2) The graph describes a situation in which:

Quiz 2: Production, Economic Growth, and Trade

Use the following to answer question Figure: Interpreting PPF Shifts -(Figure: Interpreting PPF Shifts) According to the graph,which of the following changes may cause the production possibilities frontier to shift inward from PPF1 to PPF0?

Use the following to answer question Figure: Interpreting PPF Shifts 3 -(Figure: Interpreting PPF Shifts 3) Which of the following would NOT be a possible explanation for the shift depicted in the graph?

Economic growth is shown as a:

Use the following to answer question Figure: Determining Production Possibilities 2 -(Figure: Determining Production Possibilities 2) Which point in the graph is consistent with a recession?

Economic growth is shown as a:

The increased participation of women in the work force:

Which is NOT a source of economic growth?

Which of the following MOST likely to cause the production possibilities frontier to shift to the right?

Which of the following results in a higher standard of living?

Use the following to answer questions Figure: Pork and Corn PPF 2 -(Figure: Pork and Corn PPF 2) The opportunity cost of producing a unit of pork is _____ unit(s) of corn.

A country can use its given resources to produce capital goods or consumer goods.This implies that:

Suppose that the government could stimulate spending in one of the following expenditure categories.In which of these categories would the spending increase contribute most to an expansion of production possibilities?

Which of the following would be MOST likely to cause the production possibilities frontier to shift to the left?

If a society's production possibilities frontier shifts to the right:

Use the following to answer question Figure: Determining Production Possibilities 3 -(Figure: Determining Production Possibilities 3) According to the graph,output combination represented by the diamond can be achieved only:

A country's GDP is inside the frontier of the production possibility frontier.This could happen because of:

Which are the principal resources that can be changed through government action?

An increase in the quantity and/or quality of labor available could be due to each of the following,EXCEPT:

Which of the following can lead to a decrease (leftward shift) in the PPF?

Use the following to answer question Figure: Interpreting PPF Shifts 2 -(Figure: Interpreting PPF Shifts 2) The graph describes a situation in which:

Use the following to answer question Figure: Interpreting PPF Shifts -(Figure: Interpreting PPF Shifts) According to the graph,which of the following changes may cause the production possibilities frontier to shift inward from PPF₁ to PPF₀?