11) Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas. Hotels are a capital good that,once built, will help produce still more consumption goods. If Puerto Rico produces more hotels than Hawaii,
A) Hawaii’s PPF will shift outward further than Puerto Rico’s PPF.
B) Hawaii’s PPF will shift inward.
C) Puerto Rico’s PPF will not shift.
D) Puerto Rico’s and Hawaii’s PPF will shift outward by the same amount.
E) Puerto Rico’s PPF will shift outward further than Hawaii’s PPF.
12) Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas. Hotels are a capital good that,once built, will help produce still more consumption goods.. According to the figure, which island will have more rapid economic growth?
A) Hawaii
B) Both Hawaii and Puerto Rico will grow at the same speed.
C) Puerto Rico
D) Neither Hawaii nor Puerto Rico will grow.
E) More than one of the above answers is correct.
13) Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is India’s most likely future PPF?
A) PPF2.
B) PPF1.
C) PPF0.
D) Either PPF0 or PPF1.
E) None of the above because economic growth will not happen in India.
14) Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is France’s most likely future PPF?
A) PPF2.
B) PPF1.
C) PPF0.
D) Either PPF0 or PPF1.
E) None of the above because economic growth will not happen in India.
15) Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, India’s most likely future PPF is ________ and France’s most likely future PPF is ________.
A) PPF1; PPF1
B) PPF2; PPF2
C) PPF0; PPF0
D) PPF2; PPF1
E) PPF1; PPF2
16) Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, which country is most likely to expand its PPF to PPF3?
A) India
B) Germany
C) Estonia
D) France and Germany equally.
E) France
17) Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, which country is most likely to expand its PPF to PPF1?
A) France and Germany equally.
B) India
C) Estonia
D) France
E) Germany
18) Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, India is most likely to expand its PPF to
A) PPF3 or PPF2.
B) PPF3.
C) PPF1.
D) PPF1. or PPF2.
E) PPF2.
19) Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, Germany is most likely to expand its PPF to
A) PPF3 or PPF2.
B) PPF3.
C) PPF1.
D) PPF1. or PPF2.
E) PPF2.
20) To increase its economic growth, a nation should
A) limit the number of people in college because they produce nothing.
B) encourage spending on goods and services.
C) encourage education because that increases the quality of labor.
D) increase current consumption.
E) eliminate expenditure on capital goods.
21) Other things equal, if Mexico devotes more resources to train its population than Spain,
A) Mexico will be able to eliminate opportunity cost faster than Spain.
B) Mexico will be able to eliminate scarcity faster than Spain.
C) Spain will grow faster than Mexico.
D) Mexico will have more current consumption than Spain.
E) Mexico will grow faster than Spain.
22) If a nation devotes a larger share of its current production to consumption goods, then
A) its economic growth will slow down.
B) its PPF will shift outward.
C) its PPF will shift inward.
D) some productive factors will become unemployed.
E) it must produce at a point within its PPF.
23) Which of the following statements is correct?
i.As the economy grows, the opportunity costs of economic growth decrease.
ii.Economic growth has no opportunity cost.
iii.The opportunity cost of economic growth is current consumption forgone.
A) i only
B) ii only
C) iii only
D) i and iii
E) i and ii
24) When a country’s production possibilities frontier shifts outward over time, the country is experiencing
A) no opportunity cost.
B) economic growth.
C) higher unemployment of resources.
D) a decrease in unemployment of resources.
E) an end to opportunity cost.
25) The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
A) increased current consumption; increased future consumption
B) increased current consumption; decreased future consumption
C) decreased current consumption; increased future consumption
D) decreased current consumption; decreased future consumption
E) nothing; increased future consumption
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