Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?
What will be an ideal response?
Nominal GDP can change because of either quantity changes or price changes. When there is inflation, nominal GDP overstates the increase in total production.
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The sacrifices made by societies in order to engage in military spending represent
A) the real costs of military spending. B) the excessive costs of military spending. C) the nominal costs of military spending. D) the opportunity costs of military spending.
The individual's budget constraint is _____
a. the amount of money she has in the bank b. determined by dividing the individuals income by the price of the goods she wants to buy c. the maximum amount one good she can consume given her consumption of other goods d. a line depicting all the possible budgets an individual could have at various occupations
If cats become a more popular pet in the United States than dogs, what can we expect to happen to the market for cat food workers?
a. MP increases. b. MRP increases. c. MP decreases. d. MRP decreases. e. Wage decreases.
Explain why a price ceiling, when applied to a market, inevitably generates chronic excess demand for the good