During an economic boom
A) aggregate demand exceeds aggregate supply. B) potential output exceeds quantity demanded.
C) actual output exceeds potential output. D) potential output exceeds actual output.
C
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How is leisure treated in the calculation of GDP of an economy? Does such a calculation imply that GDP is good measure of well-being? Why or why not?
What will be an ideal response?
The neoclassical theory of investment
A) links investment spending to stock prices. B) emphasizes that current investment spending depends positively on the expected future growth of GDP. C) emphasizes the role of real interest rates and taxes as determinants of investment. D) suggests that a downturn in real GDP will lead to a sharp fall in investment, which leads to further reductions in GDP through the multiplier.
In which of the following situations would each of the members be responsible for producing an equal share of the total amount of output sold by the cartel engaged in joint profit maximization?
A) When the amount of revenue generated by each member of the cartel is the same. B) When there are no economies of scale in production. C) When each member of the cartel is using the same scale of production. D) When marginal costs of production are the same for each of the members of the cartel.
One way that the government encourages the production of a good with positive externalities is to offer
A) an effluent fee. B) a market to pollute. C) a subsidy. D) a pollution tax.