During the mid 1980s the price of gasoline fell. Americans purchased not only more gasoline but other goods as well. Use consumer theory to explain why this happened
What will be an ideal response?
Essentially two effects are unleashed at the same time. The substitution effect induces people to consume more of the good whose relative price fell and the income effect from the lower-priced gasoline induces people to consumer more of all goods including gasoline.
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In 2009 in the United States, net domestic product at factor cost was $11,091 billion. Additionally, rent was $2,000 billion, profits were $1,000 billion, and interest was $358 billion. Hence wages were
A) $7,733 billion. B) $9,091 billion. C) $10,091 billion. D) $8,091 billion. E) $12,091 billion.
A fundamental reason that governments provide public goods is that
A. negative externalities are part of the production process of those goods. B. those goods are perfectly divisible. C. those goods are subject to the free-rider problem. D. public goods are merit goods.
Among countries with per capita gross national income in 2006 of greater than $24,000,
A. services tend to represent a smaller share of GDP. B. agriculture tends to produce a larger share of GDP. C. the consumer price inflation rate tends to be lower. D. high-income households tend to consume a larger share of GDP.
If the natural rate of unemployment was 6 percent, the current unemployment rate was 10 percent, and the potential GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed:
A. $160 billion in output not produced B. $240 billion in output not produced C. $320 billion in output not produced D. $480 billion in output not produced