Assume an economy is experiencing a high rate of unemployment. It must be the ca

Question

Assume an economy is experiencing a high rate of unemployment. It must be the case that this economy is c a. operating on its production possibilities frontier. C b. operating beyond its production possibilities frontier. O c. operating inside of its production possibilities frontieir. C d. operating at one of the endpoints of its production possibilities frontier. According to Heilbroner, the solutions to the two basic economic problems/tasks are: O a. tradition, markets, and interest rates. c b, production and distribution. c. manorial estates, guilds, and the Catholic Church. d. command, markets, and tradition Adam Smith's famous invisible hand passage in the Wealth of Nations was used to: C a. describe the process by which market prices serve to allocate resources in a society/economy. b. describe the process by which fiscal policies are carried out in a societyleconomy. c c, describe the process by which monetary policies are carried out in a society/economy. c d, describe the process by which command-based economic systems allocate resources in a societyleconomy.

Explanation / Answer

1.

Since the production possibility can be defined as a line which is summation of different combinations of two different goods which can be produced with the available resources by using it efficiently.

If the economy is currently in a situation where there is very high unemployment rate in the economy, It means economy resources are under utilised. It means economy is operating below the production possibility frontier.

Hence option c is the correct answer.

2.

According to the Heilbroner, the solution of two basic economic problems are production and distribution.

Hence option b is the correct answer.

3.

The famous Adam Smith sentence are the invisible hand in the book of Wealth of nation. It means there is an invisible hand in the economy which leads equilibrium in the economy without government intervention and it is demand and supply in the market. It means this forces leads equilibrium price and this price leads to distribution of resources in the economy.

Hence opton a is the correct answer.

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