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Chapter 10: Q. aFCT (page 215)

Has China's production possibilities curve been shifting outward or inward were the past $40$ years? Explain your answer

Short Answer

Expert verified

Every point along the curve is efficient; points shifting outward the curve are unobtainable or inefficient.

Step by step solution

01

Given Information

The assembly possibilities frontier model illustrates for a nation's leaders what goods to produce and what is to be given to the market.

Explore how shifts within the economy cause shifts within the assembly possibilities curve ofa country using real-world

02

Explanation

Given the actual fact that resources are scarce, we have got constraints, which is what the curve shows us. When the economy grows and each one other things remain constant, we are ready to produce more, so this may cause a shift within the assembly possibilities curve outward, or to the correct. is that if market would to say no, the curve would obviously shift to the left. When the curve shifts outward, or to the right, meaning output is increasing.

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Most popular questions from this chapter

Suppose that during the past $3$ years, equilibrium real GDP in a country rose steadily, from $450$ billion to $500$ billion, but even though the position of its aggregate demand curve remained unchanged, its equilibrium price level steadily declined, from $110$ to $103$ . What could have accounted for these outcomes, and what is the term for the change in the price level experienced by this country?

Identify the combined shifts in long-run aggregate supply and aggregate demand that could explain the following simultaneous occurrences,

a. An increase in equilibrium real GDP and an increase in the equilibrium price level

b. A decrease in equilibrium real GDP with no change in the equilibrium price level

c. An increase in equilibrium real GDP with no change in the equilibrium price level

d. A decrease in equilibrium real GDP and a decrease in the equilibrium price level

This year, a nation's long-run equilibrium real GDP and price level both increased. Which of the following combinations of factors might simultaneously account for botb occurrences?

a. An isolated earthquake at the beginning of the year destroyed part of the nation's capital stock, and the nation's government significantly reduced its purchases of goods and services.

b. There was a technological improvement at the end of the previous year, and the quantity of money in circulation rose significantly during the year.

c. Labor productivity increased throughout the year, and consumers significantly increased their total planned purchases of goods and services.

d. The capital stock increased somewhat during the year, and the quantity of money in circular. tion declined considerably.

Why might a return of the U.S. population growth rate to its prior level also tend to boost the growth of U.S. Long-run aggregate supply? (Hint: Recall that real GDP growth is generated by the contributions of growth in labour and capital and growth in productivity of these resources.)

Continuing from Problem $10 - 2,$ suppose that the full-employment level of nominal GDP in the following year rises to $21.85$ trillion. The long-run equilibrium price level, however, remains unchanged. By how much (in real dollars) has the long-run aggregate supply curve shifted to the right in the following year? By how much, if any, has the aggregate demand curve shifted to the right? (Hint: The equilibrium price level can stay the same only if $L R A S$ and $A D$ shift rightward by the same amount.)

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