A black market is a market in which
A) goods are traded at prices above their legal maximum prices.
B) sales taxes are effectively doubled.
C) goods are sold at outlet prices.
D) sales take place exclusively at outlet prices.
Answer: A
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"Any social planner who implements efficient outcomes will produce the same output in a given market as the competitive market would." In addition to the conditions of the first welfare theorem, which of the following have to hold in order for the statement in quotes to be true?
A. Consumer tastes are quasilinear. B. Consumer tastes are homothetic. C. Production frontiers are homothetic. D. Both (a) and (c). E. Both (b) and (c). F. None of the above.
Which of these changes is observed in an economy when a recessionary gap is closed in the long run?
a. An increase in the inflation rate and a decrease in the unemployment rate b. An increase in the level of output and a decrease in the price level c. An increase in both the rate of output and the price level d. A decrease in both the rate of output and the price level e. A decrease in the inflation rate and an increase in the unemployment rate
The logic behind the tradeoff between inflation and unemployment is that high aggregate demand puts upward pressure on wages and prices while raising output.
Indicate whether the statement is true or false.
The optimal allocation of resources is found:
A. where MB = MC. B. at every point along a production possibilities curve. C. where the marginal benefit is at its greatest. D. where the marginal cost is at its lowest.