In a Pure Exchange Economy, If an Allocation Is Pareto

question 21

True/False

In a pure exchange economy, if an allocation is Pareto efficient, it is impossible to have two people who prefer each other's consumption bundles to their own.

---

Definitions:

Money Multiplier

The ratio that measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.

Fed

The Federal Reserve System, which is the central bank of the United States, responsible for monetary policy.

Bonds

Fixed-income investments representing loans made by an investor to a borrower, typically corporate or governmental, where the borrower agrees to pay back the borrowed funds with interest at a later date.

Money Multiplier

A factor that quantifies the amount of money the banking system generates with each unit of reserves.