Within the framework of the aggregate expenditures model, what will happen if an economy is operating at a real GDP greater than full-employment real GDP?
a. An inflationary gap exists.
b. Real GDP will fall.
c. The inventories of firms will rise.
d. Firms will cut back on their current rate of output.
a
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Paying into a pension fund while you are earning wages and salaries is equivalent to
A. borrowing money. B. lending money. C. withdrawing from a savings account. D. paying off debt.
Unemployment insurance is:
A. money that is paid by the government to people who are unemployed. B. offered by the government as a way to affect the level of seasonal unemployment. C. offered by companies as a way to affect the level of frictional unemployment. D. All of these are true.
Firms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 5,000 balls, which it sells for $10 each. At the output level of 5,000 the average variable cost is $6.00, the average
total cost is $7.50, and the marginal cost is $10.00. What would you expect the firm to do in the short run? The market in the long run? What will be an ideal response?
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Kate is considering whether to play the second game. If Kate only cares about the expected value of the outcome and does not care about risk, she should:
A. compare the cost of playing the game with the value of her time. B. play if the cost of playing the game is greater than the expected value of the payoff. C. not play since she never wins anything. D. play if the cost of playing the game is less than the expected value of the payoff.