The definition of gross domestic product is
A. the total value of all sales in the economy.
B. the total value of production in the domestic economy plus the production of domestic firms in foreign countries.
C. the total value of all sales of final and intermediate goods in the domestic economy.
D. the total of the money values of all final goods and services produced in the domestic economy within a specific time period.
Answer: D
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If current unemployment is close to the natural rate of unemployment, the level of real GDP is likely to be close to the level of potential output
Indicate whether the statement is true or false
The "no shirking constraint" (NSC) curve is
A) downward-sloping to reflect the fact that at higher wages, firms will monitor workers more to see whether they are shirking. B) downward-sloping to reflect the fact that shirking tends to be higher in lower-paying industries. C) upward-sloping because at high levels of unemployment, workers will refrain from slacking without much other incentive. D) upward-sloping because at high levels of employment, many "slacking" individuals have been hired. E) vertical because the constraint represents the absolute amount of time a firm will tolerate workers' slacking without laying them off.
An example of moral hazard is
a. people drive less carefully in icy conditions with antilock brakes than without b. people drive as safely with more airbags as without c. football players avoid 'spearing' with their heads even with safer helmets d. people read the medicine warnings as carefully when self-medicating as with a doctor's prescription
Assume a ceiling price is set above the equilibrium price. The final result is the equilibrium price
a. True b. False Indicate whether the statement is true or false