Explain the three ways GDP can be measured
What will be an ideal response?
GDP can be measured three ways. First, GDP represents the market value of the final goods and services produced in the economy during a given period. This would be obtained by adding C, I, G, and NX. Second, GDP is the sum of the value added by firms. The value added for a firm equals the value of the production (at that stage of the production process) minus the value of the intermediate goods (excluding labor services). The final value of aggregate output can be calculated by either summing the value of all final goods and services OR by summing the value added of all goods and services at each stage of production. And finally, GDP is also the sum of all incomes earned in a given period.
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In the above figure, the slope across the arc between b and d is
A) 1/2. B) 1/3. C) 5/3. D) 6/5.
When the absolute price elasticity of demand equals 1, demand is
A) elastic. B) unit-elastic. C) inelastic. D) undetermined without more information.
A barrier to entry
A. usually takes the form of a cartel. B. slows or even prevents entry into a market. C. can be thought of as unrelated to monopoly. D. makes it illegal for firms to enter the industry.
In 1993, the debate heated up in the United States about the North American Free Trade Agreement (NAFTA), which proposed to reduce barriers to trade (such as taxes on or limits to imports) among Canada, the United States, and Mexico. Some people opposed strongly the agreement, arguing that an influx of foreign goods under NAFTA would disrupt the U.S. economy, harm domestic industries, and throw American workers out of work. How might a classical economist respond to these concerns? Would you expect a Keynesian economist to be more or less sympathetic to these concerns than the classical economist? Why?
What will be an ideal response?