Choose the best answer:

1) In the market economy, most of what we consume is obtained by _?_

1. exchange
2. greed
3. a command system

2) During periods of recession,

1. government spending discouraged; exports are increased
2. interest rates are lowered; government spending encouraged
3. importations are encouraged; export subsidies decreased

3) Assume that Philippine agricultural land is used either to grow rice and tobacco. Agricultural researches developed a new rice hybrid that is more resistant to drought and pests. What effect will this have on the production possibilities frontier for rice and tobacco?

1. maximum possible production of rice will rise; maximum possible production of tobacco will not change
2. maximum possible production of tobacco will rise; maximum possible production of rice will not change
3. maximum possible production of both rice and tobacco will rise

4) An economist claims that "evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of _?_

1. a simplifying assumption
2. negative economics
3. positive economics
4. normative economics

5) Interest rates are raised/increased to induce spending.

1. True
2. False