An increase in business inventories during a time period, ceteris paribus, will
A. Increase GDP during that period.
B. Never affect GDP because changes in inventories are not included in the calculation of GDP.
C. Not affect GDP during that period but will increase GDP in later periods when the inventory is sold.
D. Decrease GDP during that period.
Answer: A
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Use the graph to answer the following question:
If the market for investment is initially in equilibrium at point A, but then implementation of fiscal policy causes crowding out to occur, the equilibrium in the market will likely
A. remain at point A. B. move toward point B. C. move toward point C. D. move toward point D.
In the long-run, a monopoly is most likely to achieve
a. An average rate of return b. Above average profits c. Economic Profits d. Both B&C
Refer to the accompanying figure. Suppose the solid line shows the current demand curve for coffee. In response to an announcement that much of next year's coffee crop has been destroyed by a storm in Brazil, you should expect:
A. an increase in the quantity of coffee demanded, but no shift in the demand curve. B. neither a change in quantity demanded nor a shift in demand because next year's coffee crop will not affect the current demand for coffee. C. the demand curve to shift to D(A) in anticipation of higher future prices. D. the demand curve to shift to D(B) in anticipation of higher future prices.
When the economy is going strong the:
A. demand for workers decreases. B. supply of workers increases. C. demand for workers increases. D. supply of workers decreases.