The sum of value added
A. Is one way to compute the GDP.
B. Equals the sum of the value of intermediate goods.
C. Measures the intangible quality of goods and services produced in the economy.
D. Equals net domestic product.
Answer: A
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Which of the following occurs when an economic activity has a spillover benefit on third parties not engaged in the activity?
A) An economic profit B) A positive externality C) A gain in producer surplus D) A gain in consumer surplus
Banks hold excess and secondary reserves to
A) reduce the interest-rate risk problem. B) provide for unexpected deposit outflows. C) satisfy margin requirements. D) achieve higher earnings than they can with loans.
If a profit-maximizing firm finds that price exceeds average variable cost and marginal revenue is greater than marginal cost, it should: a. reduce output, but continue producing in the short run. b. increase output
c. shut down. d. not alter its production level since it is earning a profit.
If the unemployment rate decreases from 9% to 6%, the economy will
A. move closer to a point on the ppf. B. remain on the origin. C. move away from the ppf toward the origin. D. remain on the ppf.