Jason and Julie are gardeners. Jason grows corn and Julie grows tomatoes. Every week they trade: Jason gives Julie a bushel of corn in exchange for half a bushel of tomatoes. Is Jason's bushel of corn counted as part of GDP? How would your answer change if Julie bought Jason's corn for $10 at the local farmers' market?
When Jason and Julie exchange corn and tomatoes, Jason's corn never appears on the market. This
unreported production is not counted in GDP. If Julie bought the corn at the local farmers' market, it would
be counted in GDP as part of consumption expenditures.
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Refer to the scenario above. The principal in this case is:
A) $300. B) $1,000. C) $1,300. D) $2,300.
When comparing a single-price monopoly to a perfectly competitive market with the same costs
A) both the monopoly's output and price are lower than the perfectly competitive market's output and price. B) both the monopoly's output and price are higher than the perfectly competitive market's output and price. C) the monopoly's output is higher and the monopoly's price is lower than the perfectly competitive market's output and price. D) the monopoly's output is smaller and the monopoly's price is higher than the perfectly competitive market's output and price.
Which of the following is not an advantage of cost-plus pricing?
A) If a firm is selling multiple products, it ensures that the firm's prices will cover costs that are difficult to assign to one product. B) It ensures that the firm will maximize its profits. C) It is easy to calculate. D) It requires little information.
Which of the following is a key assumption leading to the Monetarist view that government deficits crowd out private investment?
A) Money demand is sensitive to the interest rate. B) The aggregate supply curve is horizontal. C) Technology is fixed. D) Investment is sensitive to the interest rate.