Recall the Application about productivity in the nation of Latvia in the 1990s to answer the following question(s). According to this Application, workers in the European Community were more productive than workers in Latvia in the 1990s, yet despite this, the European Community chose to buy timber from Latvia. If EU governments decide to buy timber only from the European Community, then:
A. its citizens will be better off while their producers may be worse off.
B. its citizens and producers will be worse off.
C. its citizens and producers will be better off.
D. its citizens will be worse off and producers will be better off.
Answer: D
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The total volume of business sales in our economy is several times larger than GDP because ________.
A. GDP does not take taxes into account B. GDP grossly understates the value of our annual output C. GDP excludes intermediate transactions D. Total sales are in money terms and GDP is always stated in real terms
Scarcity
A. necessitates choice among consumer goods. B. of income renders purchase decisions interdependent. C. affects all consumer decisions. D. may involve forgoing the pleasure of one good in order to enjoy another. E. All of the above answers are correct.
Tele-Com, Inc., the nation’s largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the
A. demand curve for the Disney Channel shifted to the right. B. supply curve of the Disney Channel shifted to the left. C. demand for the Disney Channel is elastic in this price range. D. demand for the Disney Channel is inelastic in this price range.
If the marginal propensity to save is 0.40, a $20 billion increase in investment spending would cause equilibrium output to:
a. increase by $50. b. increase by $80. c. decrease by $33. d. decrease by $40. e. decrease by $20.