The GDP deflator is designed to adjust nominal GDP
a. for changes in the unemployment rate.
b. for changes in prices.
c. for problems that arise because of externalities.
d. for changes in interest rates.
B
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Firm A producing one good acquires another firm B producing another good. The cross price elasticity of demand for the goods owned by each firm is 2.6 . Holding other things constant, the acquiring firm should
a. Raise prices on both goods b. Lower prices on both goods c. Raise price on the acquired good only d. Need more information
In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue. (Source: New York Times, July 28, 2012 ) As the lobster catch increases, there is
A) a movement along the demand curve, resulting in a higher price and a decreased quantity. B) a movement along the demand curve, resulting in a lower price and an increased quantity. C) no change in either the price or the quantity. D) a movement along the demand curve, resulting in a higher price and an increased quantity.
Last year in the United States, the price of snowboards rose by 5 percent and the price rise resulted in a 15 percent increase in the quantity supplied. This outcome is an indication that
A) the supply curve of snowboards shifted rightward. B) the supply of snowboards is price elastic. C) some firms entered into the snowboard industry. D) All of the above answers are correct.
Consider the following simple regression model y = 
0 + 1x1 + u. Suppose z is an instrument for x. if Cov(z,u) = 0 and Cov(z,x)
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A. 
B. 
C. Cov(z,u)
D. Cov(z,x)