If the price level is increasing at 4% and output is increasing at 5%, then
A. Nominal GDP is increasing at 20%.
B. Nominal GDP is increasing faster than real GDP.
C. Real GDP is increasing faster than nominal GDP.
D. None of the choices are correct.
Answer: B
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Which of the following is not one of the theories that have emerged as alternatives to the HO model?
A) The human skills theory. B) The product life cycle theory. C) The similarity of preferences theory. D) All of the above have been suggested as alternatives to the HO model.
When a tax is imposed on the buyers of a good, the demand curve shifts
a. downward by the amount of the tax. b. upward by the amount of the tax. c. downward by less than the amount of the tax. d. upward by more than the amount of the tax.
According to the substitution effect, a drop in price increases real income (purchasing power), and if the good is normal, consumers will respond by buying more of the good in question. Thus a drop in price increases quantity demanded
Indicate whether the statement is true or false
Refer to the accompanying figure. As the production of pizza increases, the opportunity cost of producing pizza:
A. decreases. B. increases. C. becomes negative. D. doesn't change.