Answer the following questions true (T) or false (F)
1. GDP is not a complete measure of well-being.
2. The size of the underground economy as a percent of GDP is larger in the United States as compared to poorer countries such as Zimbabwe.
3. If an increase in crime causes households to spend money on police and security systems, GDP will rise.
1. TRUE
2. FALSE
3. TRUE
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How are the following events likely to affect the market supply of rice in an economy?
a) A fall in the wage rate of farm labor b) An increase in the productivity of farm capital due to better technology c) An increase in the use of agricultural land for non-agricultural purposes
If stock prices follow a random walk,
A. speculation in the stock market destabilizes prices. B. a stock’s past performance is not a good indicator of its future performance. C. rumors, news, and other “signals” have no effect on stock prices. D. the stock market does not participate in channeling resources toward firms with high stock prices.
Using Figure 3 below the distance between what 2 lines illustrate a recessionary output gap?
A. PAE2 to PAE3
B. PAE1 to PAE2
C. Y1 to Y2
D. Y2 to Y3
"If event A occurs then event B will follow" is a
A. statement lacking in logic. B. positive statement. C. non-testable statement. D. normative statement.