Which of the following is a TRUE statement?
A) The most important source of economic growth is the rate of population growth since a growing population stimulates demand for goods and services, and provides the labor to produce the goods and services.
B) The most important sources of economic growth are the new ideas generated by entrepreneurs in an economic system that permits them to capture the rewards of their entrepreneurial activities.
C) The most important sources of economic growth are the quantity and quality of the land and other natural resources a country controls.
D) The most important source of economic growth is the extent to which the government directly enters into decisions where research and development activities should be directed and who should be involved in research and development activity.
B
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The relationship between real GDP and potential GDP over the business cycle can be best summarized by which of the following statements?
A) Real GDP fluctuates around potential GDP. B) Real GDP is always equal to potential GDP. C) Real GDP cannot be greater than potential GDP. D) Real GDP cannot be less than potential GDP. E) Real GDP cannot be equal to potential GDP.
Refer to Figure 11-13. The lines shown in the diagram are isocost lines. If the price of labor is $50 per unit, then along the isocost AF, the total cost
A) is $500. B) is $750. C) is $1,250. D) cannot be determined without the price of capital.
Which of the following would shift the aggregate expenditure line upward?
a. an increase in labor supply b. a decrease in labor demand c. a decrease in government spending d. a decrease in net exports e. an increase in autonomous consumption spending
To determine the optimal method of production for a good or service, a perfectly competitive firm needs to know all of the following except
A. the prices charged by its rivals. B. the prices of inputs. C. the technologies of production that are available to the firm. D. the market price of output.