Economists generally use gross domestic product to measure a nation's total output because it
What will be an ideal response?
is the best available measure of the market value of all final goods and services produced during a period
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If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy ____ and your nominal income ____
a. decreases, decreases
b. increases, increases
c. decreases, remains the same
d. increases, remains the same
In the aggregate expenditures model, a tax cut causes a(n):
A. upward shift in the aggregate expenditures curve. B. downward shift in the aggregate expenditures curve. C. leftward movement along the aggregate expenditures curve. D. rightward movement along the aggregate expenditures curve.
While there is no specific number of firms that must dominate an industry before it is an oligopoly, the number of sellers characterizes an oligopoly when
A. there are more firms than a monopolistically competitive market. B. there is a sufficient number of firms to satisfy the market demand. C. the firms are so large relative to the total market that they can affect the market price. D. the firms are so small relative to the total market that they cannot affect the market price.
In the short run, why would a firm in a perfectly competitive market shut down production if the prevailing market price falls below the lowest possible average variable cost?
A. At that point (economic) profit is zero. B. Below that point average revenue becomes less than marginal revenue. C. Below that point marginal revenue becomes insufficient to pay for avoidable average variable cost. D. Below that point other firms with similar cost will find it profitable to enter the market and take away demand from the existing firms.