A recession conventionally is defined as a decrease in
A) real GDP that lasts for at least six months.
B) the growth rate of real GDP that lasts for at least six months.
C) potential GDP that lasts for at least six months.
D) real GDP that lasts for at least three months.
E) the inflation rate that lasts for at least six months.
A
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Assume that the LCD and plasma television sets industry is perfectly competitive. Suppose a producer develops a successful innovation that enables it to lower its cost of production. What happens in the short run and in the long run?
A) The firm will probably incur losses temporarily because of the high cost of the innovation, but in the long run it will start earning positive profits. B) The firm will be able to increase its economic profits temporarily, but in the long run its economic profits will be eliminated as other firms copy the innovation. C) Initially, the firm will be able to increase its profit significantly, but in the long run its profits will still be greater than zero but lower than its short-run profits because other firms would also innovate. D) This firm will be able to earn above normal profits indefinitely if it obtains a patent for its innovation.
Which of the following does NOT appear in the current account part of the balance of payments?
A) a loan of $1 million from Bank of America to Brazil B) foreign aid to El Salvador C) an Air France ticket bought by an American D) income earned by General Motors from its plants abroad
Barter is the direct exchange of goods and services for: a. any kind of money
b. other goods and services. c. either goods or money. d. commodity money. e. foreign currency.
Assume a country experiences heavy capital outflows. What is the first round effect on the real risk-free interest rate?
a. The change in the real risk-free interest rate is ambiguous. b. The real risk-free interest rate rises. c. The real risk-free interest rate falls. d. The real risk-free interest rate is unaffected.