The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called:
a. real GDP
b. potential GDP
c. aggregate supply
d. aggregate demand
b. potential GDP
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The table above gives data for the nation of Pearl, a small island in the South Pacific. The economy is at full employment when real GDP is
A) $31 billion. B) $34 billion. C) $28 billion. D) $22 billion. E) $25 billion.
The market basket cost $300 in 2015, while it cost $250 in the base year. Therefore, the price index for 2015 is
A) 83. B) 120. C) 80. D) cannot be calculated because the inflation rate is not given.
In the long run, a perfectly competitive firm is expected to generate either an economic profit or an economic loss
a. True b. False Indicate whether the statement is true or false
The Big Mac index uses prices of a common item to predict long-run changes in exchange rates
a. True b. False Indicate whether the statement is true or false