Compare and contrast the two normative standards to income distribution discussed in the text: The productivity standard and the egalitarian principle
What will be an ideal response?
The productivity standard is also called the contributive standard or the merit standard. People are rewarded according to merit, where merit is determined by one's ability to produce what is considered useful by society. The egalitarian principle would distribute income equally. The two principles are very different since the former will generate an unequal distribution of income and the latter an equal distribution of income. They also differ greatly in incentive structure. The egalitarian principle provides no incentives for doing work that is unpleasant or for bearing risk.
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Which of the following are included in GDP?
a. Traffic congestion b. Crime c. Pollution d. Underground economic activity e. None of the above
Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Demand for inputs is a derived demand because
A. it is derived from the need for income. B. it corresponds to the derived supply of the inputs. C. producers want the input to produce the finished good. D. it is downward sloping.
If the United States exports 6 million bushels of corn to Japan and thereby earns income with which it imports 3 million digital video recorders from Japan, the United States' terms of trade with Japan for corn and digital video recorders is 2:1.
a. true b. false