If Only Two People Are Trading Their Endowments and No

question 119

Multiple Choice

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

• A) be on their contract curve.
• B) result in unequal marginal rates of substitution for the two people.
• C) result in one person being worse off than with his or her endowment.
• D) All of the above.

---

Definitions:

Depression

A severe and prolonged downturn in economic activity, characterized by high unemployment, sharp declines in GDP, and faltering business confidence.

Investment

The process of distributing funds or assets in anticipation of earning returns or profits.

Classicals

Economic theorists and policy makers from the 18th and 19th centuries who focused on free markets, competition, and the ideas of self-regulating economies.

Keynes

An economist who revolutionized economic thinking with theories on government spending's effects on economic cycles.