Holding all else constant, a country's standard of living will rise if its
A. nominal GDP grows at a faster rate than real GDP.
B. nominal GDP grows at a slower rate than real GDP.
C. the rate of population growth exceeds the rate of growth of real GDP.
D. the rate of population growth is less than the rate of growth of real GDP.
Answer: D. the rate of population growth is less than the rate of growth of real GDP.
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Suppose the economy is initially operating at point A in the above figure. Which of the following statements is TRUE?
A) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the short run. B) An unexpected reduction in aggregate demand will cause the economy to move from point A to point C in the short run. C) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the long run. D) none of the above
An agreement between the dominant firm and the fringe members to keep output low often breaks because:
a. the fringe firms usually appropriate a larger share of the profits. b. the agreement is not self enforcing. c. the dominant firm usually appropriates a larger share of the profits. d. both have an incentive to charge a higher price for their output.
A monopolistically competitive industry is like a perfectly competitive industry in the sense that: a. non-price competition is significant in both industries
b. there are no substantial barriers to entry in both cases. c. economic profits in long run equilibrium are zero in both cases. d. both (b) and (c) are true.
Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is $24. The marginal cost of producing a second hat is $26 and the marginal cost of producing a third hat is $28. The market price of a hat is $26
To maximize profit, Tammy produces ________ per day. A) 1 hat B) 3 hats C) 2 hats D) as many hats as possible