In the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, Box 3 should be filled with 
A. AS for Aggregate Supply.
B. PI for Price Index.
C. RGDP for Real Gross Domestic Product.
D. AD for Aggregate Demand.
Answer: A
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Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs
First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's shut down in the short run? A) Yes, because he is incurring an economic loss. B) Yes, because he cannot cover all of his fixed costs. C) No, because is making positive economic profit. D) No, because he can cover all of his variable costs.
Refer to Table 7-6. All of the following are terms of trade that could possibly benefit both countries except
A) 1/4 of a belt : 1 sword. B) 7/10 of a belt : 1 sword. C) 4/5 of a belt : 1 sword. D) 2/3 of a belt : 1 sword.
Gross domestic product (GDP)
a. always increases over time b. increases only if prices increase because the goods and services are measured in current prices c. increases only if output of good and services increase d. increases only if either prices increase or output increases, but not a combination of both e. increases with either an increase in prices or an increase in output, or a combination of both
Which of the following is an accurate example of what an aggregate demand curve shows?
a. Jerry’s demand for soft drinks produced in the United States increases as the overall price of soft drinks drops. b. The quantity of real GDP demanded in Canada increases as the general level of prices in the Canadian economy decreases. c. The city of Chicago increases its spending when the quantity of real GDP demanded in the United States decreases. d. Foreign demand for U.S. wheat increases when the general level of prices in the United States decreases.