Which of the following is included in gross private domestic investment?I.The purchase of new capital goodsII.An increase in business inventories
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Answer: C
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When in 1985 a British pound cost approximately $1.30, a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar, the same Shetland sweater would have cost
A) less than $130. B) more than $130. C) $130, since the exchange rate does not affect the prices that American consumers pay for foreign goods. D) $130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.
Given the path of natural real GDP growth, economists prefer an economy such as ________, in which the real GDP gaps are ________
A) Stabilia's, minimized B) Stabilia's, maximized C) Volatilia's, minimized D) Volatilia's, maximized
If a person is risk neutral, then she
A) is indifferent about playing a fair game. B) will pay a premium to avoid a fair game. C) has a horizontal utility function. D) has zero marginal utility of wealth.
Wild Woman's Wild Wilderness Adventures sells 1,000 vacation packages each year. The average total cost of the packages is $450 and each package sells for $770 . Annual profit is
a. $230 b. $320 c. $2,300 d. $320,000 e. $3.2 million