Which of the following comparisons of efficiency and equity is correct?
a) Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
b) Equity can be judged on positive grounds, whereas efficiency requires normative judgments.
c) Efficiency is more difficult to evaluate than equity.
d) Equity and efficiency are both maximized in a society when total surplus is maximized.
Ans: a) Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
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Assuming the Federal Reserve is targeting the interest rate, a decrease in money demand will
a. shift the LM schedule to the right. b. shift the LM schedule to the left. c. shift the IS schedule to the right. d. not shift the LM schedule. e. none of the above.
According to Walton and Rockoff, the primary reason the Federal government failed to build an adequate highway system before the Civil War was
a. the technology was not available. b. the canal craze diverted attention. c. rivalries among different sections of the country stalled legislation. d. the teachings of Adam Smith were taken too literally.