Flowers are more expensive on Valentine's Day than at other times of the year, yet sales of flowers are highest on that day. How does economic theory account for this?
A. Florists know that there are no substitutes for flowers, so they take advantage of consumers on Valentine's Day.
B. Flowers are not subject to the law of demand
C. People buying the flowers are irrational.
D. An increase in demand pushes up the market clearing price of flowers.
Answer: D
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A recessionary gap occurs when
A) aggregate demand falls, but other things remain constant. B) the short-run equilibrium level of real GDP is less than the level consistent with the long-run aggregate supply curve. C) the short-run equilibrium level of real GDP is greater than the level consistent with the long-run aggregate supply curve. D) short-run aggregate supply falls, but other things remain constant.
An example of how economic growth might not lead to economic development is:
A. the average income in a nation increased with greater GDP growth. B. when a nation's economy grew, the rate of malnutrition among children was relatively constant. C. the rate of literacy increased among all groups when a nation's economy grew. D. people had greater social mobility due to the growth experienced in the nation.
Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would
a. rise, but domestic output would fall. b. decline, but domestic output would rise. c. decline as would domestic output. d. rise as would domestic output.
The third phase of the industrial revolution was largely based on the development of the following products: ____________________________________________.
Fill in the blank(s) with the appropriate word(s).