If a society relies on competitive markets to allocate goods, then
A) an equitable distribution is assured.
B) an equitable distribution is certain to not occur.
C) the competitive equilibrium will be Pareto superior to any other.
D) social welfare as measured by consumer surplus plus producer surplus will equal zero.
C
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The union representing the bread makers at the Hostess Bread Company went on strike and demanded higher wages than what the firm wanted to pay
I. If the firm is in a competitive labor market the union can only raise wages by decreasing employment. II. If the firm is a monopsony in the labor market the union can only raise wages by decreasing employment. III. If the firm is a monopsony in the labor market the union can both raise wages and increase employment. A) I only B) II only C) I and II D) I and III
Consider debt-equity swaps as an approach to debt reduction. Briefly describe how this works. State two arguments in favor of significant reliance on this strategy and two arguments against
What will be an ideal response?
Assume you borrow funds to buy a new car at 10 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 8 percent
If you are correct in your assumption, your real rate of interest on the car loan will be A) 2 percent. B) 8 percent. C) 10 percent. D) 18 percent.
The situation in which actual output exceeds potential output
a. is impossible because all resources are employed to produce potential output b. is possible only in times of high unemployment c. is possible only if the unemployment rate is negative d. is possible only in the long run e. creates pressure for inflation