How do firms respond to unplanned inventory changes? What is the effect on their production and GDP?
What will be an ideal response?
If inventories are above their target levels, that is, more than planned, firms decrease their production. As a result, GDP decreases. Conversely, if inventories are below their target levels, that is, less than planned, firms increase their production. In this case, GDP increases.
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When a quota on a product is eliminated, the ones who benefit the most are the
A. domestic consumers of the product. B. foreign consumers of the product. C. domestic workers in industries producing the product. D. domestic producers of the product.
A game in which each player has a dominant strategy of defecting, and each ends up worse off than if they had both cooperated is called
A) a pure coordination game. B) a prisoner's dilemma game. C) an assurance game. D) a battle of the sexes game.
If the money supply is $600 and nominal income is $3,000, the velocity of money is
A) 1/50. B) 1/5. C) 5. D) 50.
If a monopsonist's labor supply curve is positively sloped, the marginal factor cost (MFC) will exceed the wage rate
a. True b. False Indicate whether the statement is true or false