Suppose a policy change generates $200,000 of benefits for low-income families and $175,000 of costs for high-income and middle-class families. We can best describe the change as
A. Pareto efficient.
B. equitable.
C. potentially efficient.
D. inefficient.
Answer: C
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What is one reason drunk driving is held in such disrepute?
A) Drunk driving imposes high potential costs on non-drunk drivers. B) Drunk driving destroys cars and telephone poles, causing disruption in essential services. C) Only drunk drivers cause automobile fatalities. D) Drunk drivers impose high potential costs on other drunk drivers.
Portfolio investment means buying
A) less than 10 percent of stock shares of of a foreign company. B) more than 50 percent of stock shares of a foreign company. C) a combination of different companies' stock shares. D) bonds through a financial company.
Which of the following statements about markets is not true?
a. A market is an impersonal mechanism. b. Markets coordinate the independent decisions of buyers and sellers. c. Markets reduce the transaction costs of exchange. d. More specialized markets are generally found in urban areas. e. All markets provide the same amounts of information.
If the sacrifice ratio is 2, reducing the inflation rate from 4 percent to 2 percent would
a. cost 1 percent of annual output. b. cost 4 percent of annual output. c. imply that unemployment would rise by 1%. d. imply that unemployment would rise by 4%.