What are the Euler Equations?
A. another name for the objective function
B. another game for the first order conditions, defining optimal choices
C. equations relating the optimal choice of interest rates to other prices
D. both A and B, but not C
Answer: B. another game for the first order conditions, defining optimal choices
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Which of the following normative criteria rejects a policy whenever there exists an alternative policy that could unanimously defeat it?
a. Majority rule. b. The efficiency criterion. c. The Pareto criterion. d. The potential Pareto criterion.
For a single restriction (q = 1), the F-statistic
A) is the square root of the t-statistic. B) has a critical value of 1.96. C) will be negative. D) is the square of the t-statistic.
Consider the indifference curve map and budget constraint for two goods, X and Y. Suppose the good on the horizontal axis, X, is normal. When the price of X increases, the substitution effect
a. and income effect both cause an increase in the consumption of X. b. causes a decrease in the consumption of X, and the income effect causes an increase in the consumption of X. However, the substitution effect is greater than the income effect. c. causes an increase in the consumption of X, and the income effect causes a decrease in the consumption of X. However, the substitution effect is greater than the income effect. d. and income effect both cause a decrease in the consumption of X.
The principle of comparative advantage states that total output is greatest when each product is made by the country that has the _____________.
Fill in the blank(s) with the appropriate word(s).