If the quantity demanded of restaurant meals increases by 20% when income increases by 10%, restaurant meals are:
A. normal goods.
B. inferior goods.
C. complementary goods.
D. substitute goods.
Answer: A
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The benefits from research and development activities
A) spill over to others, including foreign residents. B) are limited to the firms investing in similar research and development projects. C) are limited to the nation in which the research and development is taking place. D) are limited to the firm winning a patent.
If the economy is in equilibrium with real GDP less than potential GDP, there is ________ gap, and a fiscal policy that ________ is appropriate
A) a recessionary; decreases aggregate demand B) an inflationary; increases aggregate demand C) a recessionary; increases aggregate demand D) an inflationary; decreases aggregate demand E) a recessionary; increases potential GDP
Refer to the table below for a prisoner’s dilemma. Frank and George are arrested and charged with armed robbery. They are isolated in separate interrogation rooms and therefore are not allowed to engage in collusion to collectively deny committing the crime. The table shows the four possible outcomes for denial and confession for Frank and George. The payoff to Frank is in the upper corner of each box, and the payoff to George is in the lower corner of each box. The most likely outcome is
a. for both to confess and spend 5 years in prison.
b. for both to deny and spend 2 years in prison.
c. for George to deny and spend 10 years in prison and Frank to confess and spend 1 year in prison.
d. for George to confess and spend 1 year in prison and Frank to deny and spend 10 years in prison.
Real GDP equals nominal GDP
a. minus exports. b. corrected for changes in the price level. c. minus personal income taxes. d. minus retail sales taxes.