Which of the following is a shortcoming of GDP?
A. GDP excludes changes in inventories.
B. GDP includes an estimate of illegal transactions.
C. GDP excludes nonmarket transactions.
D. GDP excludes business investment spending.
Answer: C
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In the presence of asymmetric information, a piece-rate contract
A) achieves production efficiency. B) can lead to agents producing more output than would occur under a fixed-rent-paid-to-the-principal contract. C) is impossible to write. D) will result in the principal earning all of the profit.
The law of diminishing marginal utility states that: a. total utility decreases as consumption of a good increases
b. total utility increases as consumption of a good increases. c. the increase in total utility from consuming an additional unit decreases as consumption increases. d. the increase in total utility from consuming an additional unit increases as consumption increases.
Figure 11-2
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In Figure 11-2, which of the points are efficient allocations of resources?
A. A, B, and C B. B and C only C. C and B and D D. B only
A bank will be able to make fewer loans if it
a. sells bonds to the Fed b. calls in loans c. increases loans from excess reserves d. borrows money in the federal funds market e. buys bonds from the Fed