An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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According to the standard competitive model, industries with increasing returns would not be profitable. However, economist Paul Romer argues that many industries may be experiencing increasing returns because
a. many important inputs are common property and therefore equally available to all firms. b. many important inputs may be nonrivalrous so that there is no limit to how much they can be used. c. of a decline in the number of monopsonistic firms in labor markets. d. of an increase in the number of firms that are natural monopolies.
Suppose Gerald works for Lola as a production assistant. Gerald and Lola fall in love, get married and have children. Gerald stops working for Lola in order to care for the children. What will be the effect of this scenario on GDP?
A) GDP will increase. B) GDP will decrease. C) GDP will not change. D) GDP may increase or decrease depending on the rate of inflation.
Growth in potential GDP in the United States is estimated to be about
A) 8.25% per year. B) 5.0% per year. C) 3.2% per year. D) 1.5% per year.
The capital account records all international purchases and sales of stocks, bonds, real estate, businesses, and bank accounts
a. True b. False Indicate whether the statement is true or false