Suppose a tornado ravages a city, causing 5 million dollars in expenditures on new construction and healthcare for the victims. Those new expenditures
A) would be added to the gross domestic product account.
B) would be subtracted from the gross domestic product account.
C) would be added to the gross domestic product account and subtracted from the national income account.
D) would impact GDP in none of the above ways.
A
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Suppose the unemployment rate is 8 percent and the natural unemployment rate is 6 percent. If potential GDP is $8 trillion, using Okun's Law what does real GDP equal?
A) $8.32 trillion B) $8.00 trillion C) $8.16 trillion D) $7.68 trillion E) $7.84 trillion
Refer to Figure 15-2. The firm's profit-maximizing price is
A) P1. B) P2. C) P3. D) P4.
At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to
A) the real wage and the budget line is tangent to an indifference curve. B) minus the real wage and the budget line is tangent to the indifference curve. C) the real wage and the budget line intersects the indifference curve. D) minus the real wage and the budget line intersects the indifference curve.
An externality is
a. always a benefit to the recipient b. always a detriment to the recipient c. an activity that occurs in a business that is unknown to management d. an unintended benefit or cost imposed on third parties resulting from market activity e. an act, caused by a firm located in this country, that has an effect on a person in a foreign country