"Fair" outcomes and "efficient" outcomes are always identical
a. True
b. False
Indicate whether the statement is true or false
False
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Janet Yellen, Chair of the Federal Reserve, must choose whether tomorrow she meets with the Secretary of the Treasury or with the Congress regarding the financial crisis. This choice reflects the
A) fact that Ms. Yellen faces scarcity. B) concept of entrepreneurship. C) fact that Ms. Yellen responds to incentives. D) use of capital.
Suppose the economy is initially in equilibrium where real GDP equals potential GDP and the inflation rate is at the target rate
Other things equal, a housing boom will cause aggregate expenditures to increase, which will result in a new, short-run equilibrium. To return GDP to its potential level, the inflation rate will adjust. With adaptive expectations, this will result in A) an increase in aggregate demand and an increase in the inflation rate. B) a decrease in aggregate supply and an increase in the inflation rate. C) a decrease in aggregate demand and a decrease in the inflation rate. D) an increase in aggregate supply and a decrease in the inflation rate.
If a good is normal and its price increases,
a. the income effect will be positive and the substitution effect will be positive. b. the income effect will be negative and the substitution effect will be negative. c. the income effect will be positive and the substitution effect will be negative. d. the income effect will be negative and the substitution effect will be positive.
If the demand for a product is perfectly inelastic and the supply curve is upsloping, a $1 excise tax per unit of output will:
A. raise price by less than $1. B. raise price by more than $1. C. raise price by $1. D. lower price by $1.