Gross domestic product (GDP) is not a perfect measure of welfare because it:
a. treats a dollar spent on guns the same as a dollar spent on education.
b. treats a dollar spent on exports the same as a dollar spent on imports.
c. double counts the value of leisure time
d. double counts depreciation.
e. counts illegal activities in the underground economy.
a
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Refer to Figure 15-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely
A) decrease the inflation rate. B) decrease interest rates. C) not change interest rates. D) increase interest rates.
If the quantity of money demanded is less than the quantity supplied at a given interest rate, what will happen to restore the market to equilibrium?
a. The public will try to buy bonds, the price of bonds will increase, and the interest rate will fall until the equilibrium is attained where the money demand and supply curves intersect. b. The public will try to sell bonds, the price of bonds will decrease, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect. c. The public will try to sell bonds, the price of bonds will increase, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect. d. The public will try to buy bonds, the price of bonds will increase, and the interest rate will rise until equilibrium is attained where the money demand and supply curves intersect. e. The public will try to buy bonds, the price of bonds will decrease, and the interest rate will fall until equilibrium is attained where the money demand and supply curves intersect.
Rational expectations economists believe that the potential effects of government policy changes are ______ addressed by households and firms.
a. slowly b. quickly c. unreasonably d. infrequently
Which of the following is the situation in which firms outside a trade bloc shift the final assembling process of partially assembled products into a member nation of the bloc and then export the finished products to other nations within the bloc?
A. rules of origin B. trade retention C. trade diversion D. trade deflection