For the purposes of GDP accounting, government purchases include:
A. the purchases of new military equipment.
B. Social Security payments.
C. direct transfer payments by the government to other individuals.
D. welfare payments.
Answer: A
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Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a fixed cost in a hospital?
A) an MRI machine B) bandages C) nurses D) syringes
When the economy is hit by a negative demand shock and the central bank pursues policies to increase aggregate demand to its initial level, then
A) inflation will be lower. B) output will be at its potential. C) output will be lower. D) inflation will be unchanged. E) both B and D.
A profit maximizing monopolist
A) is guaranteed to lose money because of a lack of competition. B) is not guaranteed to make a positive profit. C) is guaranteed to make a positive profit, hence the desire to be a monopolist. D) is guaranteed to make a non-negative profit, otherwise government would step in to assist.
The interest-rate-based monetary policy transmission mechanism suggests that the changes in the money supply affect aggregate spending
A. directly through interest rates and planned consumption spending. B. indirectly through tax rates and planned consumption spending. C. directly through interest rates and planned government spending. D. indirectly through interest rates and planned investment spending.