Meausured in current prices, not adjusted for inflation, rises much faster than real GDP, difference between two years reflects inflation
What will be an ideal response?
nominal GDP
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As more of a good is consumed, the marginal benefit of the good
A) increases. B) decreases. C) remains constant. D) is unpredictable. E) first decreases and then increases.
Cash payments are generally preferable to in-kind payments when the utility of the transfer recipient is the only criterion because _____
a. it is cheaper to distribute in-kind benefits b. cash is necessary for utility maximization c. recipients know their utility functions better than anyone else d. of diminishing marginal utility
What is "asymmetric information"?
What will be an ideal response?
Monetary policy affects the economy with a long lag, in part because
a. proposals to change monetary policy must go through both the House and Senate before being sent to the president. b. monetary policy works through changes in interest rates, and the Fed does not have the ability to change interest rates quickly. c. changes in interest rates primarily influence consumption spending, and households make consumption plans far in advance. d. changes in interest rates primarily influence investment spending, and firms make investment plans far in advance.