Figure 21-1

In Figure 21-1, a reform in the distribution system that achieves the same distribution with less damage to work incentives is represented by a move from which points?

Which of the following is an example of a positive, as opposed to normative, statement?

a. The federal government should decrease coverage of unemployment benefits to stimulate the economy out of the recession. b. Congress should agree on lower government spending for the next fiscal year. c. The Federal Reserve Bank should increase interest rates in response to the higher-than-expected inflation in the economy. d. The unemployment rate last year was lower than any other year in the last century.

Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because:

A. they distort domestic and world agricultural prices. B. they inhibit technological progress in agriculture. C. production and trade occur on the basis of comparative advantage. D. price supports are set below market-clearing levels.