An efficient allocation of goods in an exchange economy means that
A) goods were produced by the most efficient technology available.
B) no one can be made better off without making somebody else worse off.
C) those made worse off are not hurt as badly as the benefits resulting from those made better off. That is, there is a net positive gain.
D) in a particular production process one gets the maximum output for a given input.
B
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The fact the consumers substitute one good for another when prices change is
A) taken into account by the fixed market basket used in calculating the CPI. B) not taken into account by the fixed market basket used in calculating the CPI. C) not important to economists. D) a reason why the CPI is used to calculate inflation rates. E) a reason why the CPI understates the actual change in the cost of living.
Suppose the nominal interest rate is 5% and the rate of inflation is 5%. The real interest rate is therefore
A) 0%. B) 1%. C) 5%. D) 6%.
Changes in all of the following shift the supply curve of loanable funds EXCEPT
A) the real interest rate. B) wealth. C) disposable income. D) expected future income.
If the aggregate price level at time t is denoted by Pt, the inflation rate from time t - 1 to t is defined as
A) ?t = (Pt - Pt - 1)/Pt - 1. B) ?t = (Pt + 1 - Pt - 1)/Pt - 1. C) ?t = (Pt + 1 - Pt )/Pt. D) ?t = (Pt - Pt - 1)/Pt.