A downturn in the economy occurs when real GDP
a. declines, inflation moderates, and full employment exists
b. declines, inflation occurs, and unemployment emerges
c. declines, inflation moderates, and unemployment emerges
d. is sustained at a relatively high level, but inflation moderates, and unemployment emerges
e. is sustained at a relatively high level with full employment, but inflation moderates
C
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The GDP equation is
A) Y = C - I - G - NX. B) Y = C + I + G + NX. C) C + I = G + NX. D) C + I = Y + G + NX.
If the interest rate increases from 5 percent to 7 percent, the present value of a future payment
A) rises. B) falls. C) is unaffected. D) might either rise or fall.
A natural monopolist that sets prices equal to marginal cost will:
A. be government owned. B. incur losses. C. have zero profit. D. still make a positive economic profit.
If there is unemployment in an economy, then the
A) economy is operating at an unattainable point. B) production possibilities frontier will shift inwards. C) production possibilities frontier must be bowed inward. D) economy is producing at a point inside the production possibilities frontier. E) production possibilities frontier will shift outwards.