The economy of Omega operates according to Okun's law. In Omega, the actual and the natural rates of unemployment equal 5 percent, and real GDP equals $10 trillion. What is potential GDP in Omega?
A. $10.5 trillion
B. $9.5 trillion
C. $9.0 trillion
D. $10.0 trillion
Answer: D
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In the above figure, if the interest rate is 8 percent
A) people sell bonds so as to convert them into money. B) people buy bonds and the interest rate falls. C) the Fed increases the quantity of money. D) people buy stocks, because stocks are more liquid than currency.
Consider a discount retailer such as Costco which uses a two-part tariff pricing strategy. The Costco membership fee
A) is used by Costco to cover its fixed costs of production. B) buys the consumer the right to make future purchases at Costco. C) is a resalable asset to the consumer. D) is a resalable asset to the producer.
If an economic model includes an assumption that there are only two nations in the world, this would be an example of
a. a critical assumption b. an implicit assumption c. a simplifying assumption d. a concrete assumption e. a detail assumption
Which statement is false?
A. A monopoly is both a firm and an industry. B. A monopoly is an imperfect competitor. C. There are monopolies in the United States at the regional and local levels. D. None of these statements are false.