Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals
A) $7,400.
B) $6,400.
C) $5,800.
D) 2,440 units.
B
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When a per-unit tax is levied on a goods market in which supply is not perfectly inelastic but such a tax nevertheless does not give rise to any deadweight loss, consumers are made no worse off by the imposition of the tax.
Answer the following statement true (T) or false (F)
An increase in income, holding prices constant, can be represented as:
A) a change in the slope of the budget line. B) a parallel outward shift in the budget line. C) an outward shift in the budget line with its slope becoming flatter. D) a parallel inward shift in the budget line.
Deadweight loss from monopoly power is expressed on a graph as the area between the
A) competitive price and the average revenue curve bounded by the quantities produced by the competitive and monopoly markets. B) competitive price line and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets. C) competitive price line and the monopoly price line bounded by zero output and the output chosen by the monopolist. D) average revenue curve and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets.
Pick the economic variable that is countercyclical
a. Wages b. Investment c. Government transfer payments d. Nominal interest rates e. All of the above are countercyclical variables