1. \"The big corporations in this country, like ExxonMobil and GM, have deep poc

Question

1. "The big corporations in this country, like ExxonMobil and GM, have deep pockets and need to be hiring more people." This is a positive statement about economic policy.

True

False

2. The smaller percentage of one's net budget one has to allocate money to a particular product, the more price inelastic will be the demand for that product.

True

False

3. In the production possibilities frontier, a nation's boundary will shift inward if they export more than they import, likely leading to inflationary pressures in the economy.

True

False

4. A point inside the production possibilities frontier represents an economythat is utilizing resources efficiently.

True

False

5. Households play a dual role of providing the factors of production whilepurchasing the goods and services of firms.

True

False

6. Excess demand in the market will cause the price of a product to decline.

True

False

Explanation / Answer

1. The statement is a value judgement and suggestion. which is not a positive but normative statement. Therefore the statement is False.

2. If the expenditure on a commodity is very small with respect to the total budget. The demand will be inelastic. For example percentage of income spent on needle is very small. A change in the price of needle will not affect the demand for needles.

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