Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, in terms of efficiency:
A. point A is preferred to point B.
B. point A is preferred to point E.
C. point A is preferred to point D.
D. point B is preferred to point A.
Answer: C
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Which of the following is not a condition required for the first welfare theorem to hold:
A. No government policy interferes with the formation of prices. B. No market actor has market power. C. Tastes are quasilinear. D. Income is distributed fairly before markets open. E. (a) and (c) F. (b) and (c) G. (c) and (d) H. (b) and (d)
An efficiency wage is ________ and results in ________
A) equal to the equilibrium wage; full employment B) above the equilibrium wage; a surplus of labor C) below the equilibrium wage; a shortage of labor D) above or below the equilibrium wage; a surplus or shortage of labor
An increase in government spending by $100 would, if the MPC = 0.90, result in an increase in real GDP by:
a. $1,000. b. $9,000. c. $900. d. $190. e. inadequate information is given.
Why does aggregate demand shift outward by a greater amount than the initial change in spending?
What will be an ideal response?