Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are as follows. Answer the question on the basis of these data. year units of output price per unit 1 3 3 2 4 4 3 6 5 4 7 7 5 8 8 Refer to the above data. In determining real GDP, the nominal GDP for:
a) each year must be multiplied by the relevant price index.
b) years 1 and 2 must be inflated.
c) years 4 and 5 must be inflated.
d) years 1 and 2 must be deflated.
b) years 1 and 2 must be inflated.
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If the MPC is 0.5, and the government cuts spending by $400b, the overall effect on GDP will be:
A. a decrease of $400b. B. an increase of $400b. C. a decrease of $800b. D. an increase of $800b.
A nation's comparative advantage
a. can almost always be traced to its natural resources b. is often based on its natural resources c. is often based on barriers to international trade d. is reflected in the shape of its demand curve for imported goods e. is a result of increasing marginal returns
Don is convinced that it would be best if the U.S. was on a gold standard. He enthusiastically reads any editorials or articles that confirm his view. He frequently dismisses editorials and articles that argue against the gold standard because he
presumes they are flawed or written by "crackpots.". Don's behavior most clearly illustrates which of the following systematic mistakes that people make? a. people are overconfident b. people give too much weight to a small number of vivid observations c. people are reluctant to change their minds d. All of the above are correct.
The spot exchange rate is the current price for an exchange that will take place a month or more in the future.
Answer the following statement true (T) or false (F)