Answer the following statement(s) true (T) or false (F)
1. The price of a good accurately reflects the total value it creates for society.
2. The Invisible Hand Theorem shows that competitive markets create the maximum possible social gain, even when all interactions among the markets are taken into account.
3. In an Edgeworth box, all Pareto-optimal allocations lie within the region of mutual advantage.
4. In an Edgeworth box economy, a competitive equilibrium must lie on the contract curve within the region of mutual advantage.
5. The gains from international trade are greatest when a country's autarkic relative prices are similar to the world relative prices.
1. False
2. True
3. False
4. True
5. False
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Monetarists accept the idea that velocity is not constant; nonetheless, they believe that it is still highly
a. unpredictable, well-behaved, and independent of money supply b. unpredictable, ill-behaved, and independent of money supply c. unpredictable, well-behaved, and dependent of money supply d. predictable, well-behaved, and independent of money supply e. predictable, well-behaved, and dependent of money supply
If for some reason U.S. residents increase their purchases of foreign assets, then all else constant which curve in the market for foreign-currency exchange shifts and which direction does it shift? What happens to the exchange rate?
Economists who view the AS curve as vertical believe that government ________________ to raise Real GDP (in the short run) from the demand side of the economy. Economists who view the AS curve as upward-sloping believe that changes in Real GDP (in the short run) _________ result from changes on the demand side
A) can do many things; cannot B) cannot do anything; may C) can do many things; may D) cannot do anything; cannot
What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?
A) Prescription medications will become an inferior good. B) There is an upward movement along the demand curve for prescription medications. C) There is a downward movement along the demand curve for prescription medications. D) The demand for prescription medications will decrease.