The production and distribution of goods and services in an economy is said to be Pareto-efficient if
A. the revenue generated from the sale of goods and services is more than the cost of production.
B. there is no alternative that reduces the cost of transportation and distribution of goods in a market.
C. the quantity of goods demanded in an economy is more than the quantity supplied.
D. there exists no alternative that keeps all individuals at least as well off but makes even one person better off.
Answer: D
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According to supply-side theory, if one starts from a balanced budget, a cut in taxes will tend to cause ________
A) a budget deficit B) no change in the federal government budget C) a decrease in aggregate supply and an increase in aggregate demand D) a budget surplus
Which of the following represents key strengths of the market economy as a system of allocation? a. Goods and services are allocated based on willingness and ability to pay,rather than based on need
b. Producers have strong incentives to innovate because successful innovatorsare rewarded with higher profit. c. Since price is freely set based on supply and demand, shortages and surplusesare minimized. d. All of the answers above are correct.
The sharp rise in the debt-to-GDP ratio in 2008-2009
a. was exclusively automatic due to the effect of declining income on government outlays and tax revenues. b. was exclusively due to an aggressive fiscal policy. c. was exclusively due to military expenditures. d. was partly automatic due to the effect of declining income on government outlays and tax revenues, and partly due to an aggressive fiscal policy. e. was exclusively due to foreign aid expenditures.
Which of the following statements is true?
A) If the actual unemployment rate is currently 5% and the natural unemployment rate is 5%, then the economy is operating at full-employment. B) The labor force participation rate is equal to the civilian noninstitutional population divided by the civilian labor force. C) A discouraged worker is counted as an unemployed worker. D) a and c E) a, b, and c