Economic experiments show that people care more about winning a game than about its intrinsic fairness
a. True
b. False
Indicate whether the statement is true or false
False
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
When there is a positive externality
A) the marginal social benefit received by consumers is greater than the marginal private benefit. B) the marginal private benefit received by consumers is greater than the marginal private cost. C) the marginal private benefit received by consumers is greater than the external benefit. D) the marginal private benefit received by consumers is greater than the marginal social benefit.
If the economy is producing ________, unemployment is at its natural rate
A) at an unemployment rate of zero B) at an inflation rate of zero C) at potential GDP D) above potential GDP
Kate and Ali can live together in a two-bedroom apartment for $600 per month, or they can each rent a one-bedroom apartment for $400 per month. Apart from the rent, they are indifferent between living together and living apart, except for one problem: Kate hates Ali's taste in music. Kate would be willing to pay up to $100 a month to avoid hearing Ali's music. Ali would give up listening to her music for no less than $300 per month. If Kate and Ali decide to live together, is it socially optimal for Ali to play her music in the apartment?
A. Yes, because the benefit to Ali of listening to her music is greater than the cost to Kate. B. Yes, because the benefit to Ali of listening to her music is less than the cost to Kate. C. No, because the benefit to Ali of listening to her music is less than the cost to Kate. D. No, because the benefit to Ali of listening to her music is greater than the cost to Kate.