The economy of Omega operates according to Okun's law. In Omega, the actual and the natural rates of unemployment both equal 5 percent, and potential GDP equals $10 trillion. What is real GDP in Omega?
A. $9.5 trillion
B. $9.0 trillion
C. $10.5 trillion
D. $10.0 trillion
Answer: D
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Japan, Singapore, and Taiwan have all:
A. had success with import substitution policy. B. imitated South Korea's export-led growth policy and failed. C. imitated South Korea's import substitution policy and failed. D. had success with export-led growth policy.
For most producing firms:
A. marginal cost rises as output is carried to a certain level, and then begins to decline. B. total costs rise as output is carried to a certain level, and then begin to decline. C. average total costs rise as output is carried to a certain level, and then begin to decline. D. average total costs decline as output is carried to a certain level, and then begin to rise.
The substitution effect of a decrease in the wage rate would lead most people to supply
A. less labor and demand less leisure. B. less labor and demand more leisure. C. more labor and demand less leisure. D. more labor and demand more leisure.
The concept of diminishing marginal rate of substitution indicates that
A) as the consumption of good X increases, individuals are willing to give up an increasing amount of good Y in order to obtain one more unit of good X. B) as the consumption of good X increases, individuals are willing to give up a decreasing amount of good Y in order to obtain one more unit of good X. C) along an indifference curve, a consumer prefers the consumption combinations moving to the northwest along the curve. D) None of the above answers is correct.