Understanding the potential for tradeoffs between ________ is an important consideration when designing poverty policy.
A. the rich and the poor
B. the old and the young
C. equity and efficiency
D. All of these are true.
Answer: C
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Indexing the tax system to take into account the effects of inflation would by itself
a. mean that only real interest earnings are taxed. b. mean an end to taxing capital gains. c. mean an increase in average tax rates. d. All of the above are correct.
If purchasing power parity holds, then if the price of a basket of goods in the U.S. rose from $1.000 to $1,200 and the price of the same basket in Poland rose from 6,400 Polish zloty to 8,000 zloty, then
a. the nominal exchange rate would be unchanged and the real exchange rate would appreciate. b. the U.S. dollar would appreciate and the real exchange rate would stay the same. c. the nominal exchange rate would be unchanged and the real exchange rate would depreciate. d. the U.S. dollar would depreciate and the real exchange rate would be unchanged.
According to real business cycle theory, a major source of fluctuations in economic activity is __________.
a. Supply shocks b. Shocks of technology c. The presence of a labor shortage
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.