Which of the following examples belong to the most significant type of nonmarket transaction excluded from the GDP?
a. Lorenzo talks to a friend on a beach.
b. Leonard trades three baseball cards for a baseball.
c. Monica cleans the kitchen in her house.
d. Alessia does charity work for her church.
c. Monica cleans the kitchen in her house.
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An increase in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending
A) decrease; increase B) increase; decrease C) increase; increase D) decrease; decrease
If expectations are formed rationally, then individuals
A) will have a forecast that is 100% accurate all of the time. B) change their forecast when faced with new information. C) use only the information from past data on a single variable to form their forecast. D) have forecast errors that are persistently low.
If price is below average variable costs at all rates of output, the quantity supplied by a perfectly competitive firm will equal
A) zero. B) the rate of output where price equals marginal cost. C) the rate of output associated with the break-even point. D) the rate of output where marginal revenue equals average fixed costs.
If it's possible to eliminate the problems created by externalities, why do they persist?
A. It can be difficult to coordinate the millions of market participants. B. Creating a more efficient solution does not mean it will have a fair distribution of that surplus. C. They can be diffuse, complex, and hard to control. D. All of these statements are true.