With fixed interest rates, unanticipated deflation hurts ________ because ________.
A. borrowers; they repay the loan in more valuable dollars
B. lenders; they get paid back in more valuable dollars
C. lenders; they get paid back in less valuable dollars
D. borrowers; they repay the loan in less valuable dollars
Answer: A
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In calculating GDP, we must
A) add the market value of imports and subtract the market value of exports. B) add the market value of exports and subtract the market value of imports. C) exclude net exports of goods and services (NX). D) add the value of the goods produced outside of the United States by American firms. E) subtract the market value of imports, because these goods are produced in a country other than the United States, and subtract the market value of exports, because these goods are consumed in a country other than the United States.
Answer the following statements true (T) or false (F)
1. The ability to produce a good or service at a lower opportunity cost than other producers face is known as comparative advantage. 2. The ability of a nation to gain from specialization and exchange is affected by factors such as shipping costs and exchange rates. 3. One cause for the uneven standard of living throughout the world is the uneven distribution of resources. 4. The application of the principle of comparative advantage requires each of two trading partners to have an absolute advantage over the other in the production of some particular commodity.
The more inelastic the demand for a product, the more the actual burden of a tax on the product will:
a. fall on sellers. b. fall on buyers. c. fall equally on both buyers and sellers. d. create a larger deadweight loss (or excess burden).
Mike's housekeeper charges $30 for mowing his lawn. Refer to the scenario above. Which of the following will happen if Mike decides to mow his lawn by himself?
A) GDP will increase. B) GDP will decrease. C) Per capita income will increase. D) GDP will remain unchanged.