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Death of people indicates loss of manpower resources and damage to the factories indicates loss of capital. Hence, there is a reduction in the country's resources which will cause a leftward or a backward shift in PPF

Every economy faces the problem of what to produce. Because resources are scarce, we cannot produce everything in whatever quantity we wish to. We are bound to face the problems of what to produce and how much. 

Illustration: Let us assume that resources are available worth  5 crore. Assuming technology to be constant, we can utilize resources entirely for the production of (say) guns and produce 500 guns, or utilize these resources entirely for the production of (say) bread and produce 500 tons of bread. We need guns for the defence and bread for the masses. Accordingly, both the guns and bread are to be produced. How much of each is to be produced depends on the wisdom of the planners in a planned economy, also upon the market forces of demand and supply in a free economy.

Cleanliness reduces chances of people falling ill and thus can ensure better health. This, in turn, will reduce forced absenteeism from work, raise efficiency level and thus raise country,s production potential. Rise in this potential shifts PPC to the right.

False

If a country is operating inside the PPC, it corresponds to under utilisation or inefficient utilisation of resources.

Yes. Because economic activity is related to the use of scarce means for the satisfaction of human wants.

Mixed economy is the one in which both private as well as public sectors play a significant role in production activity.

False. 

Marginal opportunity cost = 5 units. Because, 

Marginal opportunity cost = Loss of output of Good - 2/Gain of output of Good - 1

when some resources are shifted from Good-2 to Good-1.

Yes. A point below PPC points to under utilisation of resources. In such a situation actual output is less than potential output.

False. 

With an efficient or fuller utilisation of resources, the economy operates on the PPC and cannot shift to point beyond the PPC because PPC shows attainable combinations of two goods with given resources and technology.

This will reduce the inequalities of income as the difference between disposable income of higher income and lower income groups will fall. This will also provide more resources to the government for spending on welfare of the poor.

Goods purchased by a production unit from other production units for resale or for using them completely during the same year are intermediate goods, whereas goods purchased for consumption/investment are final goods.

Intermediate good: Raw material etc.

Final good: Machine purchased for installation in a factory etc.

Detailed Answer:

A variable whose value is measured at a point of time.

No. Choice between consumer goods and capital goods refers to the problem of ‘what to produce’.

Monetary flow refers to the flow of factor incomes, rents, interest, profit and wages from the producing sector to the household sector as monetary rewards for their factor services. The households spend their incomes on the goods and services produced by the producing sector. Accordingly, money flows back to the producing sector as household expenditure.

Income are created in production units. Production units distribute this income to households in return for factor services provided' Households spend this income on goods and services produced by the production units, thus making the circular flow income completes.

The circular flow of income and product involves two basic principles:

(i) Real flows (in terms of goods and services) are opposite to the money flows.

(ii) Flow of income across different sectors always implies the identify between payments and receipts.

(c) Real flow......

Real flow of income implies the flow of factor services from the household sector to the producing sector and the corresponding flow of goods and services from the producing sector, to the household sector.

(a) Capital..........

Capital Goods are the goods which are used to produce producing other goods.

Fall in the value of a capital good due to normal wear and tear and foreseen obsolescence, during its use in production.

(a) Wealth.............

Nominal Flow/Money Flow is the flow of factor payments and payments for goods and services between households and firms.

No. Choice between ‘production for the poor’ and ‘production for the rich’ refers to the problem of ‘for whom to produce’. It is a problem relating to choice of users of goods and services.

Production possibility curve (or transformation curve) is a curve showing different possibilities of producing a set of two goods with (i) the given resources, and (ii) given technology.

Market economy is the one in which decisions regarding what, how and for whom to produce are left to the market forces of supply and demand.

Increased expenditure by government on public goods like defence, maintaining law and order, etc. increases their availability to the people of the country. For example, more expenditure on maintaining law and order raises the sense of security among the people. Any such expenditure raises welfare of the people.

No. If resources are not fully utilised, total output in the economy will be less than the potential output and we are inside the PPC.

No. If resources are not fully utilised (or are under-utilised) an economy may as well be inside the PPC.

Yes. Scarcity is a situation when demand for a good exceeds its supply even at a zero price.

Central problems are those problems which arise in every economy. At the micro level, these problems are: 

(i) What to produce? (ii) How to produce? and (iii) For whom to produce? 

At the macro level, these are (i) problem of fuller utilisation of resources, and (ii) problem of growth of resources.

Macroeconomics is the study of economic relationships, economic problems or economic issues at the level of economy as a whole, like the problem of inflation or of unemployment.

Those economic variables which are studied at the level of economy as a whole are known as macro variables. 

Examples: GDP, Disposable Income, Household consumption, etc.

Opportunity cost refers to value of a factor in its next best (or second best) alternative use.

Yes. PPC is drawn on the assumption of constant technology. Which is why PPC shifts in response to a shift in technology.

No. Microeconomics does deal with the aggregates. Example: market demand is the aggregation of individual demand.

True

MRT is the same as marginal opportunity cost which is the slope of PPC.

No. Marginal opportunity cost increases as resources are shifted from Use-1 to Use-2. This is in accordance with the law of variable proportions.

Marginal opportunity cost refers to loss of output of Good-Y for producing an additional unit of Good-X, some resources are shifted from Good-Y to Good-X.

False

Convexity of PPC to the origin points to decreasing slope of PPC and decreasing marginal opportunity cost. However, PPC is always concave to the origin. Because marginal opportunity cost must rise as more and more resources are shifted from Use-1 to Use-2.

False

Opportunity cost is the cost of a factor in its best alternative use. Accordingly, it is the minimum cost of a factor, and therefore unavoidable.

No. Opportunity cost is the value of a factor in its second best alternative use. It is implicit cost, not an explicit cost. Explicit cost is paid-out cost.

No. PPC is always concave to the origin, as marginal opportunity cost (indicating slope of the curve) must rise as more and more resources are shifted from Good-2 (on Y-axis) to Good-1 (on X-axis).

No. Every economy faces the central problems, though these are solved differently in different economies. Because, scarcity of resources is common to all economies.

Capital Goods are the goods which are used to produce producing other goods.

In a centrally planned economy, the decision regarding resource allocation is taken by the  central authority or the government.

Centrally planned economy is the one in which decisions regarding what, how and for whom to produce are taken by some central authority. 

Goods that are required for satisfaction of wants.

No. In a market economy central problems are solved through the free play of the market forces. 

These are used for final consumption and investment.