If the quantity of goods and services produced in the economy decreases
A) it may be possible for real GDP to increase.
B) real GDP would certainly increase.
C) it may be possible for nominal GDP to increase.
D) nominal GDP would certainly increase.
Answer: C
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Even though it is generally true that the more goods and services people have, the better off they are, GDP provides only a rough measure of well-being
Assuming language is not an issue, what other factors besides GDP might you consider when deciding where to live and work?
Economists may disagree about how to solve an economic problem because they
a. use different models to analyze the problem and its solutions. b. have different political and moral beliefs. c. disagree about the facts of the situation. d. All of the above are correct.
There is much world concern over the deteriorating condition of the Pyramids and other historical structures in Egypt. While people of all nations enjoy visiting these structures, there has been little financial support for preservation coming from within Egypt or from elsewhere. Economists would describe this as an example of
a. an externality. b. a public good. c. a free rider problem. d. imperfect information.
A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?
a. People face tradeoffs. b. The cost of something is what you give up to get it. c. Rational people think at the margin. d. People respond to incentives.