Answer the following statement(s) true (T) or false (F)
1. Distributing goods equally among consumers would be not only fair but efficient.
2. A market price contains no more information about a good than a good social planner would be able to obtain.
3. According to F.A. Hayek, knowledge is lost as statistics are used to convey information.
4. Whether a good is distributed by a social planner or a market system, the area beneath the demand curve out to the quantity available accurately measures the value consumers receive.
5. When allocation decision are not made on the basis of price traditional methods of social gain understate the actual gain to society.
1. False
2. False
3. True
4. False
5. False
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Which of the following best represents household saving?
A) T - (G + TR) B) (Y - TR) + I C) (Y - C - G - NX) D) (Y + TR - T) + C
Over the long haul, rapid increases in the supply of money lead to
What will be an ideal response?
In the above figure, start with the economy in equilibrium at point A. Then an unanticipated reduction in aggregate demand triggers a shift from AD1 to AD2. In the short run, this would cause
A. the price level to fall by some amount less than P1 but greater than P2, and the rate of unemployment would decrease. B. the price level to fall from P1 to P2, real Gross Domestic Product (GDP) to fall from Y1 to Y2, and the rate of unemployment to increase. C. no change in either the price level or real Gross Domestic Product (GDP), but a decrease in unemployment. D. the price level to move from P1 to P2, but real Gross Domestic Product (GDP) would stay at Y1.
Suppose the government has a $180 billion budget deficit. If the government creates $95 billion of new money to finance this deficit and finances the rest by borrowing, the amount borrowed from the public will be
A) $85 billion. B) $95 billion. C) $180 billion. D) $275 billion.