When every good or service is produced up to the point where the last unit provides ________, allocative efficiency occurs
A) a marginal benefit to society greater than the marginal cost of producing it
B) a marginal benefit to society equal to the marginal cost of producing it
C) a marginal benefit to society less than the marginal cost of producing it
D) a marginal benefit to society equal to zero
B
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Suppose that inflation is at the target rate and output has fallen substantially below potential output. A central bank with a primary objective of price stability should ________
A) do nothing, because inflation cannot rise when unemployment is high B) ease monetary policy, to avoid a decrease in the inflation rate C) do nothing, because stabilizing economic activity is not a primary objective D) ease monetary policy, because avoiding high unemployment is more important than avoiding high inflation E) none of the above
By 1910 the top ten industries included printing, malt liquors, tobacco cars and railroad cars. The introduction of these new top ten industries indicated
(a) a shift in consumer preferences toward luxury items. (b) an increase in real incomes in the U.S., permitting people to purchase luxury items. (c) a smaller percentage of total consumption expenditures on essential food, clothing and shelter. (d) all of the above.
If purchasing-power parity holds, then the value of the
a. nominal exchange rate is equal to one. A dollar buys as many goods in the U.S. as it does overseas. b. nominal exchange rate is equal to one. A dollar buys the quantity of foreign currency equal to the U.S. price level divided by the foreign country's price level. c. real exchange rate is equal to one. A dollar buys as many goods in the U.S. as it does overseas. d. real exchange rate is equal to one. A dollar buys the quantity of foreign currency equal to the U.S. price level divided by the foreign country's price level.
Who determines rationality?
a. the person observing the choice b. the person making the choice c. the person providing the choice d. the person affected by the choice