Given the information that follows, how much are your family business's (a) accounting profits? (b) Economic profits? Sales: $700,000; total costs: $450,000; return you could have earned elsewhere: $20,000; wages you and your family members could have earned doing the same work for another firm: $120,000.
What will be an ideal response?
Total revenue ($700,000) - Total cost ($450,000) = Accounting profit ($250,000) - Implicit costs ($20,000 + $120,000) = Economic Profit ($110,000).
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Assuming the price level has not changed, how would an increase in the aggregate demand affect real GDP?
A) It only changes with changes in exports. B) It increases. C) It only changes with changes in imports. D) It decreases.
Price discrimination reveals
A) the inherent greed of Western culture. B) the inability for regulators to stop unethical practices. C) that individuals have different willingness to pay. D) that individuals have the same willingness to pay.
Exchanging dollars for euros to pay a computer manufacturer in Belgium would occur
A) in the foreign exchange market. B) at the Federal Reserve. C) at the European Central Bank. D) in the letter of credit market.
The Gibson Paradox shows that:
a. Central banks face a paradox when they want to stimulate their economies because consumers may not spend the newly created money. b. When monetary policy is loose and expected inflation rises, the nominal interest rate rises rather than falls. c. When fiscal policy is loose (i.e., high government spending and falling tax rates), society as a whole is more willing (not less willing) to give up consumption today for consumption in the future. d. When expected inflation rises, nominal interest rates fall rather than rise. e. When expected inflation falls, government spending tends to increase, rather than decrease, as is frequently assumed.