Which of the following statements is true about empty cores?
a. It is individually rational to form coalitions when cores are empty.
b. There are no unblockable payoff allocations.
c. The only way to prevent blocking is side payments among coalition members.
d. Empty cores leave each person with payoff just equal to their production values.
B
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In the classical model, an increase in aggregate demand will lead to an increase in wage rates while a decrease in aggregate demand will
A) change the price of capital. B) leave wages unchanged since workers will not take a cut in pay. C) increase wages since business will be desperate for labor. D) decrease wages.
Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the most liberal Democrat suggests an increase to Food Stamp (SNAP) allotments. Suppose the most conservative Republican suggests an increase in defense spending. The Republican says that, on average, military spending does the most good, so more is better. The Democrat is arguing that the extra food purchased by the extra spending will increase well-being the most. What is going on here?
A. Only the Democrat is using marginal analysis. B. Both are employing marginal analysis, just from different perspectives. C. Neither are using marginal analysis. D. Only the Republican is using marginal analysis.