Potential real GDP in an economy is
a. the level of production that occurs if there's no cyclical unemployment.
b. the amount an economy can produce if every man, woman, and child is employed.
c. the level of production that occurs if all unemployment is cyclical and structural.
d. the level of production that occurs if the unemployment rate is zero.
a. the level of production that occurs if there's no cyclical unemployment.
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Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic devices, including smartwatches, smartphones, and products that can be attached to the smartwatches and smartphones, to serve consumers who
have become more health conscious and wish to monitor various health conditions. These firms are reacting to which of the three key economic ideas? A) people are rational B) people respond to economic incentives C) firms attempt to maximize revenues D) optimal decisions are made at the margin
Economic theory allows us to predict the behavior of a specific person or firm
a. True b. False
Unemployment payments
a. fall during periods of prosperity and thus reduce inflationary pressures b. fall during periods of prosperity and thus increase inflationary pressures c. fall during recessions and thus increase the problem of unemployment d. rise during periods of prosperity and thus increase inflationary pressures e. rise during recessions and thus increase the problem of unemployment
A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat.Number of goatson the commonsPrice per 2-yearold goat ($)Income pergoat ($/year)180302752537020465155555 If the villagers purchase the socially optimal number of goats and bonds,
then total village income will be ________. A. $15 B. $125 C. $250 D. $70