Assume an economy produces only footballs and baseballs and the base year is 2005. Quantity producedPrices 2005200620052006Footballs200300$20$25Baseballs500600$10$15Given the data in the table above, what is the value of real GDP in 2006?
A. $12,500
B. $10,000
C. $ 9,000
D. $12, 000
Answer: D
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The demand for a good is more price inelastic if
A) its price is higher. B) the percentage of income spent on it is larger. C) it is a luxury good. D) it has no close substitutes.
Consider the market for medical doctors. Suppose the opportunity cost of going to medical school increases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. Holding all else constant, in ten years the equilibrium wage for doctors will
a. increase. b. decrease. c. not change. d. It is not possible to determine what will happen to the equilibrium wage.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1. B. P4 and Y2. C. P5 and Y1. D. P5 and Y2.
Whenever a society forgoes current consumption to invest in capital goods
A) it will have less to consume next year. B) it will be easier for that society to consume less in the future because people will become accustomed to less. C) that society can consume more in the future. D) it will be forced to produce fewer capital goods in the future.