TRUE OR FALSE 1. If an economy is operating inside its production possibilities curve, it is not at full capacity, and is operating inefficiently. Such an economy's actual output is less than potential output. 2. By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. 3. To generate increasing economic growth, a society would produce fewer capital goods and more consumer goods in the present. 4. A point beyond the boundary of an economy's production possibilities curve is both attainable and efficient. 5. An inefficient allocation of resources or unusually high unemployment can each be illustrated by

TRUE OR FALSE 1. If an economy is operating inside its production possibilities curve, it is not at full capacity, and is operating inefficiently. Such an economy's actual output is less than potential output. 2. By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. 3. To generate increasing economic growth, a society would produce fewer capital goods and more consumer goods in the present. 4. A point beyond the boundary of an economy's production possibilities curve is both attainable and efficient. 5. An inefficient allocation of resources or unusually high unemployment can each be illustrated by

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 32P: An economy starts off with a GDP per capita of 5,000. How large will the GDP per capita be if it...

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3. Consider a three-period overlapping generations economy with N young people born each period. Each young person receives y goods, but nothing when middle-aged or when old. People can access a storage technology that yields one good next period for every good put in storage in the current period. Alternatively, there is a capital good, with one unit of the consumption good acquiring one unit of capital. For each unit of capital acquired in date t, 1.2 units of the consumption good will be received at date t+2. If the person liquidates the capital after one period, though, then only .8 units of the consumption good can be obtained at date t + 1. Assume that there is a 50% probability that a person will want to consume only when middle-aged and a 50% probability that a person will want to consume only when old. Whether someone is an "early" or "late" consumer will be revealed only at time t + 1. (a) Derive the equilibrium in this economy without an intermediary bank. How much would…
Consider a society consisting only of Helen, who allocates her time between sewing dresses and baking bread. Each hour she devotes to sewing dresses yields 4 dresses and each hour she devotes to baking bread yields 8 loaves of bread. Suppose that a sewing machine is introduced that enables Helen to sew 8 dresses per hour rather than only 4. a. If Helen works a total of 8 hours per day, show how this development shifts her production possibilities curve on the graph below. Instructions: Use the tool provided to draw Helen's new PPC. Plot only the endpoints of this curve and locate these endpoints on the аxes. Helen's PPC 72 Тools 64 56 PPC2 48 40 32 24 16 8. 8. 16 24 32 40 48 56 64 72 Loaves of bread per day Dresses per day
Refer to the Interactive below: Production Possibilities and Economic Growth II. GRAPH M CALCULATIONS Capital Goods DHEHBANGST 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 More → Saving 1 3 Consumption Goods Produced Capital Goods Produced 4 5 N Production Possibilities (Present) Production Possibilities (Future) 6 7 8 9 10 11 12 13 14 15 Consumption Goods 6 7 More Consumption 4.0 7.5 Reset Instructions: Adjust the slider and gather Information from the graph to answer the following questions. a) If a country produces 4 units of consumption goods, how many units of capital goods can it currently produce using all of its resources? 7.5 Ⓒ b) If a country produces 7.5 units of capital goods, how many units of consumption goods can it currently produce? c) If a country produces 7.5 units of capital goods now, and it continues to produce 7.5 capital goods in the future, how many units of consumption goods can it produce in the future? report your answer to one decimal place d) If a…
15. Which of the following statements is NOT true regarding the production function and the production possibilities curve? a. Both the production function and the production possibilities curve maximise the amount of output attainable. b. The production function describes the capacity of a single firm, whereas the production possibilities summarises the output capacity of the entire economy. c. A production function tells us the maximum amount of output attainable from the use of all resources. d. The production possibilities curve expresses the ability to produce various combinations of goods given the use of all resources.
4. Consider an economy that produces two different types of goods: apples and oranges. Assume that apple production rises 3% in 2013 (relative to 2012) and orange production rises 4% in 2013. Which of the following statements is TRUE? a) Nominal GDP growth is positive b) Real GDP growth is less than 3% c) Real GDP growth is between 3% and 4% d) Nominal GDP growth is zero.
Production possibilities (alternatives) A Capital goods 5 Consumer goods 0 B 5 achieve economic growth. с 3 9 D 2 12 A achieve the full employment of available resources. B allocate its available resources most efficiently among alternative uses. use its resources more efficiently than the data in the table now indicate. E 1 14 F 0 Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must: 15
4. Explain the idea of the macroeconomic production function to someone who knows no economics. The production function we have discussed relates output per capita to technology, labor (and population growth rate), capital, and hu- man capital. We should properly think of all of these variables as endogenous variables. Think about policies that would affect these. Articulate three policy recommendations for each. Be careful about the distinction between labor and population. Do you think policies that would maximize investment would also maximize welfare? 5. Using the Solow model, explain the effects of the following events on steady state income per capita level and income per capita growth rate of country Adanus using proper terminology: (a) Aliens attack Adanus and destroy all existing factories. Thankfully, the citizens were not affected by the attacks. (b) Adanus receives a large influx of migrants from Mersinis. Population in- creases overnight. The migrants have the same…
QUESTION 28 1. Production Possibilities (alternatives) A B с D Capital goods Consumer goods E 5 0 F 4 5 3 2 9 Is unobtainable in this economy 1 0 12 14 15 Refer to the above table. A total output of 3 units of capital and 4 units of consumer goods: Would involve an inefficient use of the economy's scarce resources Will result in the maximum rate of growth available to this economy Is irrelevant because the economy is capable of producing a larger total output
5. Diagram P, is a creation prospects bend on which two focuses, An and B, have been plotted. Diagrams P2 and p3 address conceivable p-p bends ten years later. Would P3 be bound to be reached in ten years if point A were chosen or point B? Clarify. Capital goods A B Consumption goods
Real Consumption westion 1 The diagram below shows alternate paths for two hypothetical economies, each starting with GDP of $1 billion. Assume that Area 1 is equal to Area 2. at yet swered rked out of Economy B 2% growth Area 2 Flag question Еconomy A 1% growth Area 1 Year X Year Y Time FIGURE 25-1 Refer to Figure 25-1. Which of the following statements about Economies A and B is correct? Select one: O a. Economy B will sustain higher material living standards than Economy A in the long run. O b. Economies A and B will have equal material living standards beginning at Year Y. O C. Economies A and B will have equal material living standards beginning at Year 0. O d. Economy A will sustain higher material living standards than Economy B in the long run. O e. Economies A and B will have equal material living standards beginning at Year X. In a macro model with a constant nrice levelan increase in government nurchases will cause the AF curve to shift E 2°C Light rain/snow 13:01 on 2 C )…
In the endogenous growth model, more time spent accumulating human capital implies A. more consumption in the near term and a higher growth rate of consumption. B. more consumption in both the short and long run. C. less consumption in the near term and no change in the growth rate of consumption. D. less consumption in the near term, but a higher growth rate of consumption in the future. O E. more consumption in the near term, but a lower growth rate of consumption in the future.
. Suppose that society decided to reduce consumptionand increase investment.a. How would this change affect economic growth?b. What groups in society would benefit from thischange? What groups might be hurt?