Pareto optimality is the condition in which
A. it is possible to make one person better off without making someone else worse off.
B. firms are forced to internalize the effects of all externalities.
C. the distribution of income is equal.
D. no change is possible that will make some members of society better off without making at least one other member of society worse off.
Answer: D
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An increase in capital brings a large increase in output at a ________ quantity of capital and a small increase in output at a ________ quantity of capital because of ________
A) large; small; the greater the quantity of capital the greater the output B) small; large; diminishing returns along the productivity curve C) large; small; diminishing returns along the productivity curve D) small; large; increasing returns along the productivity curve E) large; small; increasing returns along the productivity curve
Develop a simple model of inflation by identifying at least two exogenous variables and describing, briefly, how the value of these exogenous variables will impact the rate of increase in the overall level of prices in the economy
What will be an ideal response?
We can say that a contract is able to prevent moral hazard when
A) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-averse people. B) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-loving people. C) it shifts risk to risk-loving people. D) it eliminates production inefficiencies due to moral hazard and shifts risk to risk-averse people.
According to some New Keynesian theories, one possible rationale for active policy making is
A. flexible prices. B. growing competition in U.S. product markets. C. people are not rational and so do not react to incentives. D. sluggish adjustment of the price level in response to changes in aggregate demand