GDP is a flow variable because
a. all macroeconomic aggregates are flow variables
b. it measures the production that takes place over a period of time
c. it measures the amount of goods and services that exist at the end of a time period
d. the number of goods and services produced is usually a fixed number
e. it accounts for the goods and services transferred from one firm to another
B
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Which of the following is a limitation of using arithmetic averages to calculate growth rates?
A) Arithmetic averages do not capture the exponential nature of growth and thus are not apt for long-run prediction. B) Arithmetic averages cannot be used in case of negative growth. C) Arithmetic averages are difficult to calculate. D) The calculation of growth using arithmetic averages requires more data than other methods.
A "liberal" would most likely argue in favor of
a. tax increases when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. b. tax cuts when fiscal restraint is necessary, and spending cuts when fiscal stimulus is necessary. c. tax cuts when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. d. spending increases when fiscal expansion is necessary, and tax increases when fiscal restraint is necessary.
Producer surplus is
A. the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. B. the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item. C. the total difference between the total amount that producers actually receive for an item and the total amount that they would have been willing to accept. D. the total difference between the total amount that consumers are willing to pay for an item and the total amount that producers would like to receive.
Suppose that the market price of good X equals the firm's cost of producing that good, but it does not reflect any costs imposed on society. Which of the following is FALSE?
A. The good is priced too low. B. An external benefit is associated with good X. C. Too much of good X is being produced. D. Resources are over-allocated in the production of good X.