The Cost- Benefit Criterion Selects a Social State by Finding

question 72

Multiple Choice

The Cost- Benefit criterion selects a social state by finding whether:

• A)the number of gainers is larger than the number of losers.
• B)society can pay compensation to losers.
• C)the gains to winners are greater than the losses to losers.
• D)gainers and losers are indifferent between alternatives.

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Definitions:

Recessionary Gap

A situation in which the real GDP of an economy is lower than its potential GDP at the full employment level, indicating underutilized resources.

Actual Output

Actual output refers to the real GDP or the total value of all goods and services produced in an economy at a given time, contrasting with potential output.

Expected Price Level

The anticipation or forecast of future prices across an economy, affecting consumer and business decisions.

Long-Term Contracts

Agreements that extend over a significant period of time, often involving commitments to buy or sell goods or services or to provide employment.