Market economies are often criticized for how they answer the basic question, "For whom are goods produced?" This criticism usually comes from people who believe that the distribution of income is not "fair." Is there some way to separate production from distribution so that we can leave production just as it is but make the distribution of income "fairer"?
Unfortunately, there is no way to totally separate the act of production from the way income is distributed. We know that incentives matter, and tying income to production gives people the incentive to produce. Fairness is a normative concept, and reasonable people will disagree over what distribution of income is more fair. Since incentives matter, any attempt to change the distribution of income is likely to destroy some of the incentives for production.
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Assume you have a credit card balance of $2,000 at 15 percent and the inflation rate is 3 percent. What are the nominal and real interest rates?
A) 15 percent nominal and 12 percent real B) 12 percent nominal and 15 percent real C) 15 percent nominal and 3 percent real D) 3 percent nominal and 12 percent real E) 15 percent nominal and 18 percent real
Refer to Scenario 1 . Explain how this economy might be able to produce 45 fish and 45 crabs?
What will be an ideal response?
If the government increases spending and there is a complete direct expenditure offset, then
A) aggregate demand and real Gross Domestic Product (GDP) will not change. B) aggregate demand and real Gross Domestic Product (GDP) will increase by the amount of the spending increase. C) the price level will drop. D) the government spending multiplier will be greater than zero.
In 2002, which of the following countries experienced a currency depreciation resulting in their inability to pay back what they had borrowed in U.S. dollars?
a. Argentina b. Brazil c. Thailand d. Malaysia