The term allocative efficiency refers to a condition in the economy where the resources are being used
A. in the areas that they are most productive or best suited for.
B. to produce cake and not bread.
C. in various ways and that shifting resources from one area to another is cost free.
D. in the most flexible but not most productive ways.
E. in the least productive ways.
Ans: A. in the areas that they are most productive or best suited for.
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Refer to Figure 4-3. Kendra's marginal benefit from consuming the second ice cream cone is
A) $6.50. B) $6.00. C) $3.00. D) $2.25.
Suppose fiscal policy makers pass a budget that cuts taxes in the current period and are expected to cut taxes in the future. Use the IS-LM model to illustrate graphically and explain the effects of this policy on current output and the current interest rate
What will be an ideal response?
Why do people in New York City often read the obituaries to locate an apartment?
A) They are strange. B) They find it efficient, given the alternatives. C) The landlords force them to. D) There is no other source of apartment rental information outside the obituaries.
Within the Keynesian model, if the output of an economy is less than the full-employment level, then
a. a reduction in government expenditures will direct the economy back to full-employment equilibrium. b. a reduction in wage rates and resource prices will quickly restore full-employment equilibrium. c. a reduction in the real interest rate will soon restore full-employment equilibrium. d. output will tend to remain below full-employment capacity unless aggregate expenditures increase.