In arriving at the quantity of output and price of its product, a company
A. chooses either output or price, and consumer demand determines the other.
B. has no control over either quantity or price.
C. makes two decisions by setting both optimal output and optimal price.
D. generally leaves both quantity and price decisions to consumers.
Answer: A
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If the tax multiplier is -1.5 and a $200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.)
A) a $300 billion decrease in GDP B) a $30 billion increase in GDP C) a $300 billion increase in GDP D) a $133.33 billion increase in GDP E) a $133.33 billion decrease in GDP
In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 500,000 . In 2011 it had a population of 5,100 and real GDP of 520,200 . During 2011 real GDP per person in Bovina grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred years. b. 2 percent, which is about the same as average U.S. growth over the last one-hundred years. c. 4 percent, which is high compared to average U.S. growth over the last one-hundred years. d. 4 percent, which is about the same as average U.S. growth over the last one-hundred years.
The proponents of fixed exchange rates argue that flexible exchange rates
A) hamper international trade because of uncertainty over what the exchange rate will be. B) force a nation to use its domestic macroeconomic policies to maintain an exchange rate. C) lead to trade protectionism. D) a and b E) a, b, and c
Responses to Changes in Demand Conditions: Interest-rate volatility:
What will be an ideal response?