Old%20Midterm%203 - Name: _ Banner ID: _ ID: A Economics...

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Name: ________________________ Banner ID: ___________________ ID: A 1 Economics 110, Midterm 3, Fall 2007 Multiple Choice Identify the choice that best completes the statement or answers the question. Each multiple choice question is 6 points. ____ 1. (6 points) GDP is a. a stock. b. a flow. c. both a stock and a flow. d. neither a stock nor a flow. ____ 2. (6 points) Which of the following statements is not correct? a. If the signaling theory of education is correct, additional schooling does not affect worker productivity but rather signals a correlation between natural ability and education. b. The theory of efficiency wages suggests that firms pay higher wages to workers in order to induce workers to be more productive. c. Discrimination against workers of a certain race or ethnicity is often in conflict with a firm's desire to maximize profits. d. The theory of compensating wage differentials reflects the different skills, abilities, and productivity of workers. ____ 3. (6 points) As a result of the trade-off between income equality and incentives to work, an optimal redistribution policy a. can never be funded through taxes on labor income. b. must always achieve a full egalitarian society. c.
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This note was uploaded on 05/17/2008 for the course ECON 1110 taught by Professor Mehta during the Spring '08 term at Brown.

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Old%20Midterm%203 - Name: _ Banner ID: _ ID: A Economics...

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