A decision made by a rational person
A. would always make the person wealthier.
B. is intended to make the person better off.
C. is intended to make the person worse off.
D. is identical to a decision that would be made by any other person facing the same choices.
Answer: B
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How does monopoly product quality compare to the quality a social planner would choose? a. The monopolist targets the marginal consumer's valuation of quality, whereas the social planner targets the average consumer's. This leads the monopolist to make inefficiently low-quality products. b. The monopolist targets the marginal consumer's valuation of quality, whereas the social planner targets
the average consumer's. This leads the monopolist to make inefficiently high-quality products. c. There is no difference due to a standard neutrality argument. d. None of the above.
One lesson of the Great Depression was that potential GDP could _____
a. be too low to ensure full employment if the population was growing b. be too low to ensure full employment in a capitalist economy c. be too low to ensure full employment in a market economy d. fall short of full-employment GDP e. exceed equilibrium GDP
Which of the following highlights a requirement of a good instrumental variable?
A. It should be included in and endogenous to the equation of interest. B. It should be included in and exogenous to the equation of interest. C. It should be omitted from and exogenous to the equation of interest. D. It should be omitted from and endogenous to the equation of interest.
The government's role of lender of last resort is directed to:
A. developing countries that are trying to build their financial systems. B. depositors; this is role the government plays when they insure depositors' balances in banks that fail. C. large manufacturing firms that employ thousands of people. D. banks that experience sudden deposit outflows.