Answer the following statements true (T) or false (F)
1. Disposable income (DI) includes transfer payments like Social Security benefits and
unemployment benefits.
2. In an economy is experiencing inflation and output growth, nominal GDP will rise faster than
real GDP.
3. If nominal GDP in one year is $5,000 billion and the price index is 135, then the real GDP that
year would be $3,704 billion.
4. To adjust nominal GDP for a given year in order to obtain real GDP, we multiply the nominal
GDP by the price index.
5. The value of a price index in the base year is always 100.
1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
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The economic way of thinking views government as a social institution
A) in which people do not compete. B) in which the public interest has priority over private interests. C) whose actions are controlled by the will of the majority. D) whose actions are determined by individuals' perceptions of their self-interest.
Vertical relationships can increase profits through
a. preventing firms from evading regulation b. creating a double-markup problem c. better aligning the incentives of manufacturers and retailers d. preventing price discrimination
In order to be successful in a market economy, entrepreneurs must
What will be an ideal response?
Which of the following are new assets of the Fed as of 2008?
A. U.S. Treasury securities and gold B. federal agency debt securities and U.S. Treasury securities C. U.S. Treasury securities and mortgage-backed securities D. federal agency debt securities and mortgage-backed securities