Economics

An increase in government spending

An increase in government spending

An increase in government spending
A) decreases consumption, increases output.
B) increases consumption, decreases output.
C) increases consumption and output.
D) decreases consumption and output.

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Gordis

An increase in government spending

An increase in government spending

An increase in government spending
A) increases consumption, increases hours worked, and increases the real wage.
B) reduces consumption, reduces hours worked, and reduces the real wage.
C) reduces consumption, increases hours worked,

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Gordis

An increase in government spending shifts the PPF

An increase in government spending shifts the PPF

An increase in government spending shifts the PPF
A) downward, and also changes its slope.
B) downward, but does not change its slope.
C) upward, and also changes its slope.
D) upward, but does not change its slope.

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Gordis

Relative to the social optimum, monopoly power tends to lead to

Relative to the social optimum, monopoly power tends to lead to

Relative to the social optimum, monopoly power tends to lead to
A) too little leisure.
B) too much leisure.
C) overproduction.
D) underproduction.

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Gordis

The presence of a distorting tax on wage income can result in

The presence of a distorting tax on wage income can result in

The presence of a distorting tax on wage income can result in
A) MPN < MRT1,C.   
B) MRT1,C < MRS1,C. 
C) MRS1,C < MPN 
D) MPN < w.

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Gordis

A competitive equilibrium fails to be a Pareto Optimum with a distorting tax because

A competitive equilibrium fails to be a Pareto Optimum with a distorting tax because

A competitive equilibrium fails to be a Pareto Optimum with a distorting tax because
A) the government wastes its revenue.
B) the firm is no longer maximizing profits.
C) the consumer's budget constraint has an additional kink.

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Gordis

An externality is any activity for which an individual firm or consumer does not take into account a

An externality is any activity for which an individual firm or consumer does not take into account a

An externality is any activity for which an individual firm or consumer does not take into account all
A) associated benefits.
B) associated costs and benefits.
C) of the ramifications of its actions on others.
D) associated costs

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Gordis

A competitive equilibrium may fail to be Pareto optimal due to all of the following except

A competitive equilibrium may fail to be Pareto optimal due to all of the following except

A competitive equilibrium may fail to be Pareto optimal due to all of the following except
A) non-price-taking firms.
B) inequality.
C) externalities.
D) distorting taxes.

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Gordis

Under a Pareto Optimum (Multiple Choice Question)

Under a Pareto Optimum (Multiple Choice Question)

Under a Pareto Optimum
A) one can only reduce someone's welfare.
B) it is never possible to improve someone's welfare.
C) it is always possible to improve someone's welfare.
D) it is impossible to reduce someone

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Gordis

A competitive equilibrium (Multiple Choice Question)

A competitive equilibrium (Multiple Choice Question)

A competitive equilibrium
A) is always economically efficient.
B) does not exist without government taxation.
C) is economically efficient only given some special conditions.
D) is efficient only if there is an externality.

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Gordis

The concept of Pareto optimality is a

The concept of Pareto optimality is a

The concept of Pareto optimality is a
A) useful concept because it guarantees economic equality.
B) useful concept that carefully balances a society's desires for equality and efficiency.
C) utopian concept.
D) useful concept

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Gordis

The second fundamental theorem of welfare economics states that

The second fundamental theorem of welfare economics states that

The second fundamental theorem of welfare economics states that
A) a Pareto optimum is always a competitive equilibrium.
B) a competitive equilibrium is always Pareto optimal.
C) under certain conditions, a Pareto optimum is a competit

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Gordis

The first fundamental theorem of welfare economics states that

The first fundamental theorem of welfare economics states that

The first fundamental theorem of welfare economics states that
A) under certain conditions, a Pareto optimum is a competitive equilibrium.
B) a competitive equilibrium is always Pareto optimal.
C) under certain conditions, a competitiv

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Gordis

Much of the writings of Adam Smith are in close agreement with

Much of the writings of Adam Smith are in close agreement with

Much of the writings of Adam Smith are in close agreement with
A) the second theorem of welfare economics.
B) the necessity of trade restrictions.
C) the first fundamental theorem of welfare economics.
D) both B and C above.

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Gordis

A Pareto optimum requires all of the following except

A Pareto optimum requires all of the following except

A Pareto optimum requires all of the following except
A) MRS1,C = MPN.
B) MRS1,C = MRT1,C.
C) MP with subscript((N)) = -slope of PPF.
D) MPN = w.

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Gordis

A Pareto optimum is a point that

A Pareto optimum is a point that

A Pareto optimum is a point that
A) a social planner would choose.
B) a malevolent dictator would choose.
C) a cooperative coalition of some altruistic consumers would choose.
D) a cooperative coalition of some socially responsibl

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Gordis

Which of the following is not equal to the others in equilibrium?

Which of the following is not equal to the others in equilibrium?

Which of the following is not equal to the others in equilibrium?
A) the real wage
B) the marginal rate of substitution between leisure and consumption
C) the price of consumption
D) the marginal product of labor

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Gordis

A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods s

A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods s

A competitive equilibrium is Pareto optimal if there is no way to rearrange or to reallocate goods so that
A) anyone can be made better off.
B) no one can be made worse off.
C) someone can be made better off without making everyone els

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Gordis

A competitive equilibrium has all of the following properties except

A competitive equilibrium has all of the following properties except

A competitive equilibrium has all of the following properties except
A) MRS1,C = MRT1,C.
B) MPN = w.
C) MRT1,C = MPN.
D) MPN = slope of PFF.

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Gordis

Points on the production possibilities frontier have the property that they

Points on the production possibilities frontier have the property that they

Points on the production possibilities frontier have the property that they
A) show the maximum amount of goods that can be consumed for given amounts of government spending.
B) show the maximum amount of leisure that can be consumed for gi

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Gordis

PPF is the (Multiple Choice)

PPF is the (Multiple Choice)

PPF is the
A) production possibilities frontier.
B) producer's preferred frontier.
C) price parity formula.
D) possible production function.

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Gordis

The PPF determines (Multiple Choice Question)

The PPF determines (Multiple Choice Question)

The PPF determines
A) the set of feasible outcomes.
B) given leisure, how much consumption a household wants.
C) the share of consumption in output.
D) all possible outcomes for a given wage.

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Gordis

Which of the following is not a reason for solving the model with a PPF?

Which of the following is not a reason for solving the model with a PPF?

Which of the following is not a reason for solving the model with a PPF?
A) It highlights the fact that firms make no profit in equilibrium.
B) It is simpler to solve the social planner problem.
C) It highlights the fact that the margi

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Gordis

The production possibilities frontier represents

The production possibilities frontier represents

The production possibilities frontier represents
A) all technologically feasible combinations of consumption and leisure.
B) all combinations of consumption and leisure for fixed output.
C) all equally affordable combinations of consum

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Gordis

The production possibilities frontier in the one-period model is a

The production possibilities frontier in the one-period model is a

The production possibilities frontier in the one-period model is a
A) behavioral relationship between consumption and government spending.
B) behavioral relationship between consumption and leisure.
C) technological relationship betwee

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Gordis

A relationship that shows the technological possibilities for an economy as a whole is called a

A relationship that shows the technological possibilities for an economy as a whole is called a

A relationship that shows the technological possibilities for an economy as a whole is called a
A) production function.
B) production possibilities frontier.
C) budget constraint.
D) utility possibilities frontier.

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Gordis

In the one-period competitive model we have been studying

In the one-period competitive model we have been studying

In the one-period competitive model we have been studying
A) consumption is exogenous and total factor productivity is endogenous.
B) both consumption and total factor productivity are endogenous.
C) consumption is endogenous and total

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Gordis

In a competitive equilibrium all these relationships hold but one. Which one?

In a competitive equilibrium all these relationships hold but one. Which one?

In a competitive equilibrium all these relationships hold but one. Which one?
A) G=T
B) Nd=Ns
C) Y=G+C
D) w=z

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Gordis

In a general equilibrium model

In a general equilibrium model

In a general equilibrium model
A) all markets but one clear.
B) there are no fluctuations.
C) all prices are endogenous.
D) all prices are exogenous.

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Gordis

A competitive equilibrium is a state of affairs in which

A competitive equilibrium is a state of affairs in which

A competitive equilibrium is a state of affairs in which
A) output is maximized, and all agents are equally well-off.
B) all agents are equally well-off and agents are price-takers.
C) economic agents are price takers and markets clear

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Gordis

Which of the following is not a property of a competitive equilibrium?

Which of the following is not a property of a competitive equilibrium?

Which of the following is not a property of a competitive equilibrium?
A) the government budget constraint is satisfied.
B) increasing total factor productivity.
C) consumers and firms optimize given market prices.
D) markets clea

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Gordis

Making use of an economic model is a process of

Making use of an economic model is a process of

Making use of an economic model is a process of
A) resolving inconsistencies in the actions of economic agents.
B) running experiments to determine how changes in the exogenous variables will change the endogenous variables.
C) running

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Gordis

Fiscal policy encompasses all of the following except

Fiscal policy encompasses all of the following except

Fiscal policy encompasses all of the following except
A) expenditures by the government.
B) taxation by the government.
C) monetary injection by the government.
D) borrowing by the government.

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Gordis

Fiscal policy refers to a government's choices over its

Fiscal policy refers to a government's choices over its

Fiscal policy refers to a government's choices over its
A) expenditures, taxes, issuance of money, and borrowing.
B) expenditures, foreign affairs, issuance of money, and borrowing.
C) expenditures, taxes, transfers, and borrowing

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Gordis

Which of the following relationships does not hold in the one-period model?

Which of the following relationships does not hold in the one-period model?

Which of the following relationships does not hold in the one-period model?
A) G=T
B) Y=zF(K,N)
C) Y=C+G
D)  π=Y-wN-C

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Gordis

In a one-period economic model, the government budget constraint requires that government spendingA)

In a one-period economic model, the government budget constraint requires that government spendingA)

In a one-period economic model, the government budget constraint requires that government spending
A) = taxes.
B) > 0.
C) = taxes + transfers.
D) = taxes + borrowing.

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Gordis

In an economic model, an endogenous variable is

In an economic model, an endogenous variable is

In an economic model, an endogenous variable is
A) a variable that has no effect on the workings of the model.
B) determined by the model itself.
C) determined outside the model.
D) a stand-in for more complicated variables.

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Gordis

In an economic model, an exogenous variable is

In an economic model, an exogenous variable is

In an economic model, an exogenous variable is
A) determined outside the model.
B) a stand-in for more complicated variables.
C) a variable that has no effect on the workings of the model.
D) determined by the model itself.

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Gordis

A closed economy is characterized by

A closed economy is characterized by

A closed economy is characterized by
A) no growth in population.
B) a Cobb-Douglas production function.
C) the absence of use of money for transactions.
D) the absence of trade with other economies.

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Gordis

An economy that engages in international trade is called

An economy that engages in international trade is called

An economy that engages in international trade is called
A) an engaged economy.
B) a cooperative economy.
C) an open economy.
D) a modern economy.

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Gordis