One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00 . Taking these four transactions into account, what is the effect on GDP?
a. GDP increases by $3.00.
b. GDP increases by $5.00.
c. GDP increases by $6.00.
d. GDP increases by $7.00.
b
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In bringing an economy out of a recession, a government will often resort to ________ fiscal policies, which often results in budget deficits
A) conservative B) innovative C) contractionary D) expansionary
Potential GDP
A) might either increase or decrease as the price level increases, depending on whether aggregate demand increases or decreases. B) decreases as the price level increases because people demand fewer goods and services. C) is independent of the price level. D) increases as the price level increases because firms supply more goods and services. E) never changes.
A firm’s demand curve can be used to determine average revenue.
Answer the following statement true (T) or false (F)
Why is it that only a small percentage of American firms are incorporated?
A. Corporate debt as stockholder’s liability B. Small size of firms C. Unlimited liability D. Inability to outlast associated individuals