Allocative efficiency is achieved when firms produce goods and services
A) at the lowest possible cost.
B) that consumers value most.
C) at the lowest opportunity cost.
D) at a marginal cost of zero.
Answer: B
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All of the following are barriers to international investment EXCEPT
A) adverse selection. B) incomplete information. C) moral hazard. D) symmetric information.
Purchasing power parity does NOT provide accurate predictions of exchange rates because
A) almost all goods and services are traded across nations. B) governments currently fix exchange rates. C) firms are unable to set prices differently across nations. D) non-traded goods account for approximately 50 percent of the value of production in an economy.
In a market where one unit of labor produces one unit of output, consumers prefer
A) a competitive labor market and a monopoly output market. B) a competitive output market and a monopoly labor market. C) a monopoly output market and a monopoly labor market. D) None of the above—they are indifferent between A and B.
In the short-run Keynesian model, to close an expansionary gap of $10 billion dollars government purchases must be:
A. decreased by less than $10 billion. B. decreased by $10 billion. C. increased by $10 billion. D. increased by more than $10 billion.