"If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B." Is this statement true or false and explain your answer
What will be an ideal response?
The statement is false. Factors other than real GDP per person affect the standard of living. For instance, factors such as household production, underground production, leisure time, and environmental quality all affect the standard of living and all are omitted from real GDP per person. In addition, the standard of living is influenced by health and life expectancy as well as by the nation's political freedom and social justice, none of which is measured by real GDP per person. Although real GDP per person is an important factor in determining a country's standard of living, it is not the only factor.
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When economists describe the theory of consumer choice, they
a. portray people as simple and methodical with perfectly predictable patterns of behavior. b. assert that consumer's decisions are based on which goods and services give them the greatest utility within their limited incomes. c. point out that consumers rarely consider utility in their purchase decisions; they look at other factors like convenience, peer behavior, and price. d. assert that the retail price is the only variable consumers really consider in making their purchasing decisions. e. admit that consumer behavior is random and there is no credible economic theory to explain the phenomenon.
What is the most likely effect when the price level in the United States rises relative to the price level in other countries, ceteris paribus?
a. U.S. exports decrease, and U.S. imports increase. b. U.S. exports and U.S. imports both decrease. c. U.S. exports increase, and U.S. imports decrease. d. U.S. exports and U.S. imports both increase.
A consumer values a car at $30,000 and a producer values the same car at $20,000 . What amount of tax will result in unconsummated transaction?
a. $4,000 b. $9,000 c. $15,000 d. $2,000
In the long run,
a. large government budget deficits cause productivity to increase, thereby leading to inflation b. large government budget deficits drive down interest rates and reduce investment spending c. large government budget surpluses mean reductions in the money supply d. changes in the government budget deficit have no effect on the capital stock e. large government budget deficits drive up interest rates and reduce investment spending