True or false? The Edgeworth box version of interpersonal trade requires the individuals to be in close proximity of one another
A) True, that way they can see each other's endowments and prices.
B) False, being in close proximity is not required for mutually beneficial trade to occur in the Edgeworth box.
C) True, the Edgeworth box only works when there folks see "eye-to-eye."
D) False, although prices are only valid if they are communicated in person.
B
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Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________
A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase
A change in inflation leads to shifts of the ________ curves
A) MP, IS, & AD B) MP & IS, but not AD C) IS & AD, but not MP D) MP, but not IS nor AD E) none of the above
In the neoclassical growth model, if two countries are exactly the same but one has a lower permanent budget deficit, we would expect that country to have
a. higher output, a higher capital-to-labor ratio, and higher output growth in the steady state. b. the same output and capital-to-labor ratio, but higher output growth in the steady state. c. higher output, the same capital-to-labor ratio, and the same output growth in the steady state. d. higher output, a higher capital-to-labor ratio, and the same output growth in the steady state.
Which of the following is not a result we would expect to result from a tariff on leather shoes? a. The price of leather shoes in the U.S. would increase
b. The amount of shoes imported into the U.S. would decline. c. Fewer pairs of shoes would be sold in the U.S. d. Domestic producers would sell fewer shoes at the higher prices.