The drawback to calculating real GDP using base-year prices is that
A) relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.
B) quality changes are reflected in base-year prices.
C) relative prices change over time and these changes are reflected in base-year prices.
D) real GDP in one year is not comparable to real GDP in another year.
A
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Leo is a welfare recipient who qualifies for two means-tested cash benefit programs. If he does not earn any income, he receives $225 from each program. For each dollar he earns (which his employer is required to report to the welfare agency), his benefit from each program is reduced by 75 cents until the benefit equals zero. Suppose Leo earns $10. He will lose ________ from each benefit, for a total loss of ________.
A. $7.50; $15.00 B. $7.50; $7.50 C. $.75; $1.50 D. $.75; $1.00
The equation of exchange states that the quantity of money multiplied by the velocity of money equals: a. real Gross Domestic Product
b. the price level. c. nominal Gross Domestic Product. d. the turnover rate. e. the demand for money.
Suppose a bank has demand deposits of $2,500, excess reserves of $125, and a reserve requirement of 25 percent. What is the loss in the money expansion process of the whole banking system if the bank decides to lend out only $100?
a. $100 b. $150 c. $200 d. $400 e. $500
Which of the following statements with respect to the monopolist is FALSE?
A) A monopolist can make higher profits if it can price discriminate. B) A monopoly tends to result in a lower quantity being sold than perfect competition does. C) Monopoly is a situation in which a single firm dominates. D) A monopoly arises in a situation with few barriers to entry into the marketplace.