b. taxes. c. the private goods and services foregone. d. inflation.
2. If the economy is currently operating on a point on the production possibility curve for government goods and services versus private goods and services, a. an annual increase in government goods and services can be obtained without any sacrifice of annual private goods and services.
b. it will be impossible to increase annual output of government goods and services. c. a decrease in the annual output of government goods and services will have no effect on the annual output of private goods and services.
d. a decrease in the annual output of government goods and services will allow an increase in annual output of private goods and services.
3. Government goods and services are usually: a. not rationed by prices. b. sold in markets. c. made available to persons according to their willingness and ability to pay. d. financed by revenue obtained from sales. 4. Taxes: a. are prices paid for the right to consume government goods and services.
b. are compulsory payments not directly related to the benefits received from government goods and services.
c. never affect economic incentives. d. are used by private firms to raise revenue. 5. A mixed economy is one in which: