Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields
A. current Gross Domestic Product (GDP).
B. real Gross Domestic Product (GDP).
C. Gross Domestic Product (GDP) net of relative price changes.
D. constant disposable income.
Answer: B
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Pizza producers charge one price for a single pizza and almost give away a second one. This is an example of
A) monopoly. B) a barrier to entry. C) behavior that is not profit-maximizing. D) price discrimination. E) rent seeking.
Positive analysis of economic policy
A) examines the economic consequences of policies but does not address the question of whether those consequences are desirable. B) examines the economic consequences of policies and addresses the question of whether those consequences are desirable. C) generates less agreement among economists than normative analysis. D) is rare in questions of economic policy.
According to the purchasing power parity theory, a rise in the United States price level of 5 percent, and a rise in the Mexican price level of 6 percent cause
A) the dollar to appreciate 1 percent relative to the peso. B) the dollar to depreciate 1 percent relative to the peso. C) the dollar to depreciate 5 percent relative to the peso. D) the dollar to appreciate 5 percent relative to the peso.
The concept of economies of scale becomes especially relevant to international trade when it enables
a. numerous small producers to supply the entire country. b. one or two large producers to supply the entire country. c. numerous large producers to supply the entire country. d. one or two small producers to supply the entire country.