One of the most crucial ideas in macroeconomics is understanding that:
A. measuring total expenditures or total income both equal total production of an economy.
B. GNP is the most commonly used measurement of total production.
C. prolonging economic downturns can be prolonged by fiscal policy.
D. zero unemployment is the best way to achieve economic growth.
Answer: A
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Empirical evidence indicates that money demand is determined by
A) interest rates and the level of GDP. B) the inflation rate and the unemployment rate. C) interest rates and the money supply. D) the money supply and the level of GDP.
Firms seek to differentiate their product
A) to avoid state and federal regulation. B) to create an illusion of value. C) to strengthen their demand and to make it more inelastic. D) to strengthen their demand and to make it more elastic.
Because of the free rider problem
a. side payments are necessary in order to achieve an efficient outcome b. a needed side payment can shrink until it is not large enough to compensate losers and still leave gainers better off c. efficient outcomes can never be achieved d. the Coase Theory often applies to real-world situations e. externalities are less common than they would otherwise be
The "vicious circle of poverty" for developing nations can best be described by:
A. Low levels of international trade that reduce exports and increase the dependence on imports B. Low incomes that inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income C. A large government sector which reduces the availability of private investment spending but which increases macroeconomic stability D. A lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses