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Question
Statistics
Posted 9 months ago

An economy is always operating at a point on which of the following curves?

Choose 1 answer:
(A) Long-run Phillips curve (LRPC)
(B) Long-run aggregate supply curve (LRAS)
(c) At the intersection of the short-run Phillips curve (SRPC) and the long-run Phillips curve (LRPC)
(D) Short-run Phillips curve (SRPC)
(E) Production Possibilities curve (PPC)
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Answer from Sia
Posted 9 months ago
Solution by Steps
step 1
Identify the key economic curves mentioned in the question: Long-run Phillips curve (LRPC), Long-run aggregate supply curve (LRAS), Short-run Phillips curve (SRPC), and Production Possibilities curve (PPC)
step 2
Understand the context: The question asks about the curve on which an economy is always operating
step 3
Analyze each option: - (A) LRPC: Represents the relationship between inflation and unemployment in the long run. - (B) LRAS: Represents the total output an economy can produce when using all its resources efficiently. - (C) Intersection of SRPC and LRPC: Represents a specific point, not a curve. - (D) SRPC: Represents the short-term trade-off between inflation and unemployment. - (E) PPC: Represents the maximum possible output combinations of two goods that can be produced with available resources and technology
step 4
Determine which curve an economy is always operating on: The economy is always operating on the Production Possibilities curve (PPC) because it represents the maximum efficient use of resources
Answer
E
Key Concept
Production Possibilities Curve (PPC)
Explanation
The PPC represents the maximum efficient use of resources in an economy, indicating that the economy is always operating on this curve.

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