Why is the gross domestic product one of the indicators of prosperity?
What will be an ideal response?
The more goods and services an economy can produce, the better off it is doing and the more that its citizens, on average, can consume. If the GDP is rising, it is an indication that overall productivity is increasing, and the corresponding wealth of the economy is growing.
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In the above figure, at any price between $8 per unit to $12 per unit, how many units will a profit-maximizing perfectly competitive firm produce?
A) None, because the producer will never choose to operate at a loss. B) Less than 20 because this will reduce marginal cost. C) Between 20 and 30, because variable costs are covered so the firm's losses will be minimized by producing rather than shutting down. D) More than 30, because variable costs are covered so that the producer can earn economic profits.
Which of the following statements is false?
A. A call option will sell for a fraction of the cost of the stock. B. A futures contract can be written for a commodity (such as wheat), or for a currency. C. A futures contract gives the owner the right, but not the obligation, to buy or sell a commodity at a specified price on a given future date. D. The specified price at which an option gives the owner the right to buy a stock at is called the stick price.
Does economic growth eliminate scarcity?
In the aggregate expenditures model, when output (real GDP) is greater than aggregate expenditure (AE) firms will
A. increase planned aggregate expenditure. B. reduce planned aggregate expenditure. C. increase production. D. reduce production.