When real GDP is lower than potential GDP, the output gap is
A. infinity.
B. negative.
C. zero.
D. positive.
Answer: B
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The stock market crashed in the year __________.
Fill in the blank(s) with the appropriate word(s).
Proprietorships are
A) the most common form of business organization in the country. B) responsible for most of the profits in the country. C) generally large relative to other business organizations. D) easy to form but difficult to dissolve.
When someone is served pizza and soda for dinner, it is typical behavior to eat some pizza, then drink some soda, then eat more pizza, and so on, until the person stops consuming both. How can this behavior be explained using economic concepts?
A. The individual is revealing that he can't decide whether he gains more utility from pizza or from soda. B. People tend to act irrationally around food, and the concept of utility maximization cannot be applied. C. The person eats pizza until his marginal utility for pizza is lower than it is for soda, then he switches to soda. D. The concept of unlimited wants says he will never tire of eating pizza and soda.
According to the monetarist point of view
A. to avoid inflation, the Federal Reserve should create reserves at the same rate as the velocity of money. B. velocity of money is not constant; therefore, the increase in the money supply should not be constant. C. in the short run, increased unemployment and/or reduced inflation are the result of a reduction in the growth of the money supply. D. in the short run, changes in the money supply can have no effect on output in the economy, only on prices.