In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
A) values goods at their market prices, multiplies them by the quantity produced, and then adds them up.
B) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
C) simply counts the total number of goods produced in the market place and then adds them up.
D) simply counts the total number of goods and services produced in the marketplace and then adds them up.
B
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Use the following graph to answer the next question.
In the diagram, Qf is the full-employment output. If the economy's current aggregate demand curve is AD0, it would be appropriate for the government to
A. reduce unemployment compensation benefits. B. reduce government purchases or increase taxes. C. increase government purchases or reduce taxes. D. reduce government purchases and taxes by equal-size amounts.
What is the drawback of forcing a natural monopolist to use a marginal cost pricing rule?
A) No deadweight loss is eliminated. B) The firm will incur an economic loss. C) The gain in consumer surplus will be less than the loss in producer surplus, thus creating additional deadweight loss. D) None of the above answers is correct.
Suppose Tim has $1,000 in cash on hand to buy collectable baseball cards at a swap meet. Tim often sells these cards at a profit. This is an example of the
A) asset demand for money. B) transaction demand for money C) precautionary demand for money. D) wealth demand for money.
According to economist Milton Friedman, a. the short-term validity of the Phillips curve is questionable
b. there might be a short-term trade-off between unemployment and inflation but not a permanent trade-off. c. trade-off happens between unemployment and inflation happens in the long run but not in the short run. d. the long-run trade-off between unemployment and inflation comes from unanticipated inflation.