For comparing changes in potential military strength and political preeminence, the most meaningful measure of economic growth would be changes in:
A. total nominal output.
B. total real output.
C. per capita output.
D. per family output.
Ans: B. total real output.
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When input prices are fixed, decreasing returns to scale implies that the long-run average cost curve is
a. downward sloping. b. horizontal. c. upward sloping. d. U-shaped.
In a dynamic economy under ideal conditions, the unemployment rate
A) increases as the price level rises. B) is greater than zero percent due to natural unemployment. C) should be zero. D) averages 6 percent. E) decreases as the price level falls.
According to the AS/AD model, if the economy is in a recession and the Fed wants to increase output and employment, it should:
A. raise reserve requirements. B. act to increase the money supply. C. act to decrease the money supply. D. raise interest rates.
We benefit from trade if we are able to obtain a good from a foreign country:
a. that has a very low domestic demand. b. the production of which requires a steady supply of unskilled labor. c. by giving up less of other goods than we would have to give up to obtain the good at home. d. by giving up more of other goods than we would have to give up to obtain the good at home. e. that has a substantial number of substitutes in the domestic market.