Which of the following statements about the social welfare function is not true?
a. It can be thought of as a set of indifference curves that depict the wealth of the entire society.
b. It does not employ interpersonal utility comparisons.
c. It is one possible method for evaluating the public interest/
d. It allows for the rankings of possible outcomes.
b
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Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Suppose Country A specializes in bananas, and Country B specializes in tomatoes. The limits to the terms of trade that Country A would find acceptable are Country A will give no:
A. more than 5 bananas for each tomato. B. less than 5 bananas for each tomato. C. more than 1 tomato for every 5 bananas. D. less than 1 tomato for every 5 bananas.
If the government undertakes expansionary fiscal policy, it:
A. could increase income taxes. B. expects aggregate demand to increase. C. expects aggregate demand to decrease. D. should force people to change their spending patterns.