Normative economics:
A. is the focus of most modern economic reasoning.
B. answers the question "What ought to be?"
C. predicts the consequences of alternative actions.
D. answers the question "What is?"
Answer: B
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Discuss the second welfare theorem. How can societies use competitive markets to achieve both efficiency and equity?
What will be an ideal response?
Peak-load pricing suggests that some prices are a function of
A) extensions. B) time. C) costs. D) constant elasticities.
Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living in the future
a. True b. False Indicate whether the statement is true or false
Which of the following is not correct?
a. Many measures of inequality are based on income, which may not reflect a person's standard of living. b. Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income. c. Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living. d. A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.