Question 2In answering the question, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis.Include correctly labeled diagrams, if useful or required, in explaining your answer. A correctly labeled diagram must have all axes and curves clearlylabeled and must show directional changes.Assume that the country of Fischerland produces only consumer goods and capital goods.CONSUMER GOODSCAPITAL GOODSa. The graph above shows the production possibilities curve for Fischerland. The production of which of the following exhibits increasingopportunity costs: consumer goods only, capital goods only, both goods, or neither good?b. Redraw the graph given above. Show a point that represents fully employed and efficiently used resources on the redrawn graph and label it A.c. Assume there is a recession in Fischerland. On your graph in part (b), label as C a point representing the recession.d. Identify a fiscal policy action that the Fischerland government can take to address the recession.e. Assume instead that no discretionary policy actions are taken. Will short-run aggregate supply increase, decrease, or remain the same in thelong run? Explain. Question 2In answering the question, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis.Include correctly labeled diagrams, if useful or required, in explaining your answer. A correctly labeled diagram must have all axes and curves clearlylabeled and must show directional changes.Assume that the country of Fischerland produces only consumer goods and capital goods.CONSUMER GOODSCAPITAL GOODSa. The graph above shows the production possibilities curve for Fischerland. The production of which of the following exhibits increasingopportunity costs: consumer goods only, capital goods only, both goods, or neither good?b. Redraw the graph given above. Show a point that represents fully employed and efficiently used resources on the redrawn graph and label it A.c. Assume there is a recession in Fischerland. On your graph in part (b), label as C a point representing the recession.d. Identify a fiscal policy action that the Fischerland government can take to address the recession.e. Assume instead that no discretionary policy actions are taken. Will short-run aggregate supply increase, decrease, or remain the same in thelong run? Explain.

A production possibility curve illustrates all the possible combinations of two goods that an…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 2 In answering the question, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis. Include correctly labeled diagrams, if useful or required, in explaining your answer. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. Assume that the country of Fischerland produces only consumer goods and capital goods. CONSUMER GOODS CAPITAL GOODS a. The graph above shows the production possibilities curve for Fischerland. The production of which of the following exhibits increasing opportunity costs: consumer goods only, capital goods only, both goods, or neither good? b. Redraw the graph given above. Show a point that represents fully employed and efficiently used resources on the redrawn graph and label it A. c. Assume there is a recession in Fischerland. On your graph in part (b), label as C a point representing the recession. d. Identify a fiscal policy action that the Fischerland government can take to address the recession. e. Assume instead that no discretionary policy actions are taken. Will short-run aggregate supply increase, decrease, or remain the same in the long run? Explain.

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