The era of Prohibition began in 1920 when the Volstead Act was passed to implement the Eighteenth Amendment to the Constitution, which prohibited the production and sale of liquor and beer. In 1920 much of this activity went underground, and Al Capone became a leading illegal entrepreneur. Assuming the amount of liquor and beer produced stayed the same, what was the effect of the Volstead Act on
the GDP in 1920?
a. GDP would have declined, since activities in the underground economy are not included.
b. GDP would have remained the same, since only the organization producing the goods changed.
c. GDP would have increased, because production in the underground economy increased.
d. Real GDP would have increased, while nominal GDP would have decreased.
a
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An autonomous tightening of monetary policy
A) causes an upward movement along the monetary policy curve. B) causes a downward movement along the monetary policy curve. C) shifts the monetary policy curve upward. D) shifts the monetary policy curve downward.
The aggregate demand curve is the total quantity of an economy's
A) intermediate goods demanded at different inflation rates. B) intermediate goods demanded at a particular inflation rate. C) final goods and services demanded at a particular inflation rate. D) final goods and services demanded at different inflation rates.
Which of the following is the most accurate statement?
a. The one argument for restricting trade that almost all economists accept as valid is the infant-industry argument. b. Almost all economists insist that it is never appropriate to protect "key" industries, even when there are legitimate concerns about national security. c. The idea that one nation might want to threaten another nation with a trade restriction is associated with the protection-as-a-bargaining-chip argument for restricting trade. d. The protection-as-a-bargaining-chip argument for restricting trade is also known as the infant-industry argument.
Bonnie volunteers to help make floral arrangements at a flower shop. She is an example of
A. human capital. B. labor. C. entrepreneurial ability. D. physical capital.