Statement I: When the unemployment rate is five percent,we are inside our production possibilities frontier.
Statement II: Full production means that the nation's resources are being allocated in the most efficient manner possible.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is false because a five percent unemployment rate typically indicates that not all available labor resources are being utilized, suggesting the economy is inside its production possibilities frontier due to underutilization of resources. Statement II is true as full production implies that all resources are being used efficiently, aligning with the concept of operating on the production possibilities frontier, where resources are allocated in the most efficient manner possible.

Statement I: When the Unemployment Rate Is Five Percent,we Are