Suppose that the production function for the economy is Y = AK0.2L0.8. If the capital stock = 40,000, the quantity of labor = 10,000, and the efficiency index = 1, real GDP is
A) $13,195.08.
B) $16,000.00.
C) $16,946.34.
D) $28,000.00.
A
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In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
a. The base year is always the first year among the years for which computations are being made. b. It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year. c. The value of the consumer price index is always 100 in the base year. d. All of the above are correct.
If M2 is four times larger than M1, the velocity of M1 should be:
A. one-fourth of the velocity of M2. B. equal to four. C. four times larger than the velocity of M2. D. equal to the velocity of M2.
Putting new ideas to work is called
A. invention. B. innovation. C. management. D. MPP.
The "lemons problem" is overcome in the used car market by
A) strict government regulation of private deals between individual buyers and sellers of used cars. B) most used cars selling for well below their true values. C) "lemon insurance" policies being offered by insurance companies. D) the existence of used car dealers who are concerned about maintaining their reputations.