Refer to Figure 11.3. Assume aggregate demand is represented by AD3 and full-employment output is $5.6 trillion. The economy confronts an inflationary GDP gap of
A. $600 billion.
B. $400 billion.
C. $800 billion.
D. $200 billion.
Answer: B
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Government ownership of industries is quite uncommon
a. True b. False
A local government currently has a tax base of $4 billion and a tax rate of 5 percent. If the tax rate is increased to 6 percent, the tax base will decrease to $3.5 billion. If the goal is to maximize tax revenues the tax rate should be
A) lowered below 5 percent. B) kept at 5 percent. C) raised to 6 percent. D) abolished.
Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is such a high demand for beef?
a. Cows reproduce at a high rate and have adapted well to their environment. b. Public policies protect cows from predators and diseases. c. Cows are privately owned, whereas many endangered species are owned by no one. d. There is a natural ecological balance between the birth rate of cows and human consumption.
Which of the following best describes total fixed cost?
a. Total fixed cost divided by the quantity of output produced. b. Total variable cost divided by the quantity of output produced. c. Total cost divided by the quantity of output produced. d. The change in total cost when one additional unit of output is produced. e. Costs that do not vary as output varies.