Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has
a. caused measured GDP to fall.
b. not caused any change in measured GDP.
c. caused measured GDP to rise.
d. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.
c
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Why might luxury-goods retailers limit purchases on a good by consumers "due to popular demand"?
A) Because they are worried about running out of supply, leaving some of their customers unhappy that they can't buy the good. B) Because they are trying to use scarcity as a way to improve the brand image of the good. C) Because they are limiting the possibility of arbitrage, where consumers buy in a low price area and resell in a higher price area. D) Because they are worried that they'll run out of the good during the all-important holiday season.
For the monopolistic competitor, MR = P.
Answer the following statement true (T) or false (F)
Being able to find stable patterns in data means that empirical models can be labeled as:
A. traditional models. B. pattern-finding models. C. heuristic models. D. butterfly effect models.
Assume a country is required by law to balance the budget every year. Suppose aggregate demand falls, causing a recession and a budget deficit. To balance the budget, what would the government need to do with the level of government spending and taxes?
How would these changes in government spending and taxes affect aggregate demand and the economy? What will be an ideal response?