In terms of the production possibilities curve, inefficiency is represented by
A. All points inside the curve.
B. A rightward shift of the curve.
C. All points outside the curve.
D. All points on the curve.
Answer: A
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An increase in the marginal tax rate
A) decreases the expenditure multiplier but cannot make it negative. B) has no effect on the expenditure multiplier. C) can either increase or decrease the expenditure multiplier. D) increases the expenditure multiplier. E) decreases the expenditure multiplier and can make it negative.
Using the above figure and the Pareto criteria to determine the public interest, would a move from point A to point C be in the public interest?
a. yes b. no c. possible, depending upon other factors d. cannot say using the Pareto criteria
The main explanation for why the cheap foreign labor argument is a poor reason for restricting international trade is that:
a. workers who get paid less tend to have lower productivity than those who get paid more. b. all firms and workers gain when there are no restrictions on international trade. c. infant industries such as steel and automobiles need to be protected. d. specialization and free trade usually raise the prices of all the traded goods, so that the workers can get paid more. e. labor costs tend to be the same worldwide in the long run because of worker mobility.
In response to the zero lower bound problem:
A. the Fed implemented the zero interest rate policy (ZIRP). B. Congress approved additional fiscal stimulus in 2010. C. the Fed pursued quantitative easing. D. the Fed ended its forward commitment in order to encourage further lending.