An economy is said to be using its resources efficiently if it is not possible t

Question

An economy is said to be using its resources efficiently if it is not possible to produce more of one good without producing less of another If the US imposes a tariff on imports of Canadian softwood lumber, we can predict that the price of new homes in the US will rise. A large decline in world prices of raw materials such as oil, lumber and copper, which are important Canadian exports, will cause a depreciation of the Canadian dollar. Inflation that is not anticipated redistributes wealth from lenders to borrowers. The natural rate of unemployment is that rate which is natural to the economy and cannot be changed by any government policies. In the long run, a negative demand shock will have no effect on real GDP but it will result in a higher price level. Total output in an oligopoly will be greater than the competitive output, but less than the monopoly output. When a firm uses its own funds to finance a project, economic profit is greater because the firm does not have to pay interest on borrowed money. A firm earning zero economic profit will shift its resources into another line of business. A shortage can be eliminated by raising price, but scarcity can never be eliminated.

Explanation / Answer

1) TRUE

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