What happens if the price of a product is below the equilibrium price?
A) There will be a surplus of the product.
B) There will be an excess demand for the product.
C) The buyers will stop purchasing a "cheap" product.
D) The producer will lower the price to sell more product.
B
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When General Motors pays an outside vendor for auto parts, this is an external cost.
Answer the following statement true (T) or false (F)
The Consumer Price Index (CPI) differs from a chain-weighted price index in that the CPI:
A. requires calculation of GDP, while the chain-weighted index does not. B. measures the costs of a typical fixed basket of goods over time, while the chain-weighted index does not. C. allows for the goods consumed in an economy to change over time, while the chain-weighted index does not. D. compares the prices of all goods in one year to the prices of all goods in other years.
Suppose velocity is 3, real output is 9000, and the price level is 1.5. What is the level of real money demand in this economy?
A) 2000 B) 3000 C) 6000 D) 30,000
Ignoring the government and foreign sectors, if planned investment spending is $500 billion, planned saving is $800 billion, and real Gross Domestic Product (GDP) is $13 trillion, then unplanned inventories will
A) decrease $300 billion. B) increase $300 billion. C) increase $800 billion. D) not change.