The underground economy
A. consists mainly of such involuntary transfer payments as savings and loan fraud and bank robberies.
B. consists only of illegal activities such as prostitution, loan-sharking, and narcotics.
C. is a very stable percentage of GDP.
D. causes GDP to be underestimated by 10 to 15 percent.
D. causes GDP to be underestimated by 10 to 15 percent.
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If the cross elasticity of demand between good A and good B is negative, then a decrease in the price of good A results in
A) an increase in the demand for good B. B) a decrease in the demand for good B. C) a movement downward along the demand curve for good B. D) an increase in the supply of good B. E) a decrease in the supply of good B.
The AB Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?
A budget line is constructed to show
a. how consumers who budget their expenditures achieve more satisfaction than those who do not. b. the set of all baskets that the consumer can afford, given prices and his or her income. c. the set of all baskets that the consumer would be willing to purchase given various prices for the goods in the basket. d. the set of all baskets that the consumer considers equally desirable.
The Ricardian Equivalence holds only if
A) the government is altruistic. B) there are no binding credit constraints. C) the government runs deficits. D) the government runs surpluses.