Refer to Figure 26-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) real GDP levels higher than what would occur if no policy had been pursued.
B) inflation rates higher than what would occur if no policy had been pursued.
C) potential real GDP levels lower than what would occur if no policy had been pursued.
D) unemployment rates higher than what would occur if no policy had been pursued.
D
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If people's expectations about future income improve so they think their future income will be higher than previously believed, then the AD curve
A) will not shift, but potential GDP will increase. B) will shift leftward because people will spend less now. C) will shift rightward because people will increase spending now. D) and the AS curve will both shift leftward because people will increase their saving. E) will not change until income actually rises.
Distinguish between scarcity and shortage.
What will be an ideal response?
Which of the following is not a characteristic of the broiler chicken industry?
A) A significant degree of industry concentration, with the four largest firms producing 40 percent of the industry's output. B) A significant degree of real and subjective product differentiation. C) An inability of individual firms to have any influence market price. D) A significant amount of advertising.
Consider a firm whose final output (and sales) in a particular year has a value of $1,200
To produce these goods, the firm used $500 worth of intermediate goods it had purchased in previous years plus $200 worth of newly-purchased intermediate goods. In the subsequent year, this same firm again sells $1,200 worth of final goods, but in this year has purchased $700 worth of intermediate goods, of which $100 is not used in current production but, rather, added to the firm's inventory. For each of these two years, calculate the value added by this firm. For each of these two years, calculate the contribution of this firm to the economy's GDP.