Real GDP is most commonly used to monitor short-run changes in
a) economic activity.
b) the rate at which a person can trade the currency of one country for the currency of another.
c) the income distribution over time.
d) the price index from the preceding period.
Answer: a) economic activity.
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If the market price is $50 for a unit of a good produced in a perfectly competitive market and the firm's minimum average variable cost is $52, then to maximize its profit (or minimize its loss) the firm should
A) definitely produce the unit. B) shut down. C) not produce the unit but remain open. D) not produce the unit. Whether the firm should shut down or remain open cannot be determined without more information. E) produce the unit only if the price exceeds the average fixed cost.
In the four-quadrant diagram of the specific factors model, the graph in the upper left quadrant is a country's
A) production function for food. B) production possibility frontier. C) labor allocation constraint. D) production function for cloth. E) labor supply curve.
If policy makers do nothing in response to an inflationary gap, what will happen?
a. a rapid movement toward lower unemployment and higher inflation b. a rapid movement toward lower unemployment and lower inflation c. a slow movement toward higher unemployment and higher inflation d. a slow movement toward lower unemployment and lower inflation
According to the circular flow diagram, a manufacturer of arms would provide arms in the market for goods and services and receive _____ in return
a. revenue b. scarce resources c. arms d. technological knowhow